Yes Bank chief executive Prashant Kumar said on Monday that Advent and Carlyle investments could be seen as "confidence capital" and the fund infusion would help achieve the lender's medium-to-long term loan growth target.

"Rs 9,000 crore is meeting our growth requirements for the medium-to-long term. There are a couple of things — one would be in terms of growth requirements for the medium-to-long term. Second, this is also a confidence capital. A confidence capital to the stakeholders like the bank would be able to grow, and the capital is not a constraint," Kumar told CNBC-TV18.

This is also a confidence capital to the stakeholders in terms of sufficiency of capital, in terms of the right kind of experience, and also in terms of how it would be at par with the peers in the private sector, Kumar said.

In one of the largest capital raises by an Indian lender, Yes Bank, on July 29, announced a fundraise of Rs 8,900 crore ($1.1 billion) from two global private equity (PE) investors — Carlyle and Advent International — with each investor acquiring up to a 10 percent stake in the bank.

This will be achieved through a combination of Rs 5,100 crore ($640 million) in equity shares and Rs 3,800 crore ( $475 million) through equity share warrants.

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"On the asset quality, slippage would be within 2 percent and our credit cost, we would like to keep within 40 basis points (bps). We are hopeful, we are confident in terms of concluding the asset reconstruction company (ARC) deal. Within those timelines, I think the bank would be left with hardly 1.5 to 2 percent of gross non-performing assets (GNPAs),” he said.

Kumar said the deal is definitely a very important milestone for Yes Bank because the lender has successfully come out of the reconstruction scheme. As per the agreement, Yes Bank will get one nominated director from the two investors.

Can’t say if Aditya Puri will join the board

Kumar also said it is too early to say that HDFC Bank’s Aditya Puri will join the Yes Bank board.

“What I'm saying is the discussion is not on a particular name, discussion is only in terms of the right of the investor to have a nominee on the board. And once this is approved, because it will go through the process of the shareholders’ approval, and the regulator’s approval once it comes through, then they will share the name with us,” he said.

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On Yes Bank stock, market expert Prakash Diwan said there is still some time for the recovery to really kickstart.

“I think this was something that was awaited. I think it's a good bet that they're taking - all these investors. But for people like us who can invest, I think there's still some time for the recovery to really kickstart.”

Yes Bank shares were trading at Rs 15.36 apiece on BSE at 10.40 am, rising 2.81 percent. The scrip climbed nearly 6 percent in early deals, hitting the day's high at Rs 15.80.

For the entire discussion, watch the accompanying video.

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(Edited by : Ajay Vaishnav)

First Published:Aug 1, 2022 10:45 AM IST