Yes Bank, which reported a profit of R1,617.7 crore in the last fiscal, is looking to expand its retail loan portfolio that currently stands at R6,326 crore. In an interview with Aparna Iyer and Malyaban Ghosh, the retail and business banking head of Yes Bank, Pralay Mondal, says the 7% interest on savings deposit that the bank offers will not hurt the its margin until deposit rates see a sharp fall. Excerpts:
How do you see the home loan segment growing?
We need to build our portfolio gradually because we tend to make mistakes in this business if we try to grow too fast. We want to see a consistent growth and are working with DHFL and Indiabulls. Even though we have our own products now, we will continue to sell products of DHFL and Indiabulls. We are focused mostly on affordable housing.
Why did Yes Bank enter the mortgage market so late?
One of the primary reasons is that it is a very competitive market and our credit underwriting standards are high. So, we will get customers for whom the rate would be near base rate and this would mean lower margins. Till the RBI introduced infrastructure bonds, it didn’t make sense for us to enter this market, but if we lend using funds raised through infrastructure bonds, the margins will be better. We are hungry for priority sector assets and we will target the affordable housing segment.
Private Banks have seen a better Casa growth than the PSBs. Why?
As and when the GDP growth accelerates, the current accounts will grow automatically. Slowdown has a larger impact on public sector banks compared with private banks because the former has a higher base. On the savings front, it is the servicing side that has the last word. Also our move to offer 7% interest on savings accounts has helped us in bringing customer, but our Casa ratio is lower, so it does not hurt us, and we are getting funds in savings account rather than from high cost fixed deposits. The 7% interest rate may start hurting us when Casa ratio crosses at least 35% or once fixed deposit rates come down below 7%. Our one year deposit rate is 8.9%.
What are your plans for rural banking?
We cannot add market share in the rural and semi-urban regions only by offering a good liability product; the liability base in rural India will help us build assets. As a bank, we are ready to cater to both cycles the pre-harvest and post-harvest cycles. This is one of the reasons we have launched credit hubs and agriculture business banking. We will give not just offer crop loans but all kinds of products and while the progress may be slow, we are in for the long haul.