04Mumbai, Nov 3:Private sector lender Yes Bank is expecting to close its stressed asset sale to JC Flowers ARC by the end of November, a top official said on Thursday.
The transfer of dud loans of over Rs 48,000 crore to the asset reconstruction company (ARC) will happen by November, the lender’s chief executive and managing director Prashant Kumar told reporters here.
It can be noted that almost the entire stock of these non-performing assets are legacy loans given out by the lender under an older management led by its co-founder Rana Kapoor, who was subsequently arrested for alleged crimes.
Transfer of the loans will result in a massive reduction in the bank’s reported gross NPA ratio to under 2 per cent from the present level of 12.89 per cent.
The ARC was selected after a competitive method and is paying a certain component as upfront cash for the loans which it will aim to resolve.
Speaking on the sidelines of the FIBAC 2022, Kumar said the legal formalities are on right now and exuded confidence that the deal will conclude by November.
Meanwhile, Kumar said the bank will take a 9.9 per cent stake in the ARC as per the deal, and await RBI nod to take it further to the intended 20 per cent level.
JC Flowers has promised to pay the bank Rs 11,183 crore for the entire pool of the stressed loans, which assures a 23 per cent recovery to the bank.
Separately, the bank is also planning to raise over Rs 8,000 crore in core capital from private equity funds Carlyle and Advent.
Speaking at the same conference, its peer RBL Bank’s chief executive and managing director R Subramaniakumar said the private sector lender will be launching a slew of secured retail products like home loans, loans against property etc over the next few months to protect its net interest margin.
He said there is a rush for deposits among banks amid high credit demand which will lead to deposit rate hikes because of competitive pressures, and added that the difficulties will persist for the next two quarters.
Over a three year period, the bank’s plan is to increase the share of retail loans in the overall mix to 65 per cent from the present 50 per cent, he said, adding that retail will include 20 per cent from credit cards and 10 per cent of microlending.
The Yes Bank scrip was trading 1.94 per cent higher at Rs 15.80, and RBL Bank was up 1.05 per cent at Rs 135.25 on the BSE. (PTI)
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