PremiumIn an interview, Sunil Mehta said the board initiated talks with potential investors to raise as much as ₹10,000 crore as part of the restructuring scheme. He also said the new asset reconstruction company would be formed by September
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MUMBAI : The new board of Yes Bank Ltd will decide on the capital raising plan that the private lender has been considering since last year, said Sunil Mehta, the bank’s outgoing chairman. In an interview, Mehta said the board initiated talks with potential investors to raise as much as ₹10,000 crore as part of the restructuring scheme. He also said the new asset reconstruction company would be formed by September. Yes Bank board on Wednesday approved the exit from the reconstruction scheme. Edited excerpts:
What is the implication of the exit from the reconstruction scheme on investors?
From the point of view of investors, there are investors who had invested ₹15,000 crore in July 2020. There will also be new investors who have expressed interest in participating in the bank’s growth from here on. The three-year lock-in under the reconstruction scheme for investors expires in March 2023. I presume at that time, these investors will make their determination on how long they want to continue to hold and benefit from their investments in the bank.
How would you rate the progress in cleaning up the bank’s books so far?
The progress has been phenomenal and beyond expectations. The board and management are proud of what has been accomplished during this very difficult period over the past two years and three months to bring stability and a new direction to the bank. It was very challenging for our 24,000 employees as they had to deal with a grave covid situation in addition to rebuilding the bank. Given the circumstances we are coming out of, in any transition of the bank, you can never say the work is completely accomplished. As we moved forward in stabilizing the bank and dealt with all legacy issues with tenacity, issues relating to every constituency and stakeholders had to be addressed to bring back confidence in the bank. That had to be accomplished by showing positive results quarter by quarter and not just an expectation in future. All the key issues had to be addressed. Expeditiously and decisively dealing with complex issues is an ongoing responsibility of any board and management. When you run a bank, you are on a treadmill. It never stops.
Is there anything left to be resolved?
From here on, it’s for the bank to get into the normal stride of improving its market position. We are in a highly competitive world, and you must keep running faster to improve your market position. From the aspects relating to management and employees and what they have delivered over the last two years, self-confidence in employees is back. The team is motivated. We have started attracting talent from the market, which is a great encouragement to see good quality people joining the bank at different levels.
When will the ARC to come up?
The process for setting up the ARC JV has been approved by the board and is making good progress. There is a Swiss challenge mechanism it must undergo and will also require regulatory approvals. We are hopeful the process will be concluded by September, if not earlier.
When do you expect new investors to come in?
As far as new investors are concerned, the formation of the new board is a prerequisite, given different regulatory and governance requirements. The potential new investors will also have a clearer line of sight of leadership, board composition and other aspects that will enable them to make their decisions. The alternate board will take responsibility and engage with potential investors as they deem appropriate.