<p>On March 5, 2020, India witnessed its biggest banking failure as its fifth-largest lender YES Bank collapsed and had to be bailed out. In an exclusive interview with Furquan Moharkan of DH on the first anniversary of the bailout, Prashant Kumar, CEO and MD of the Bank talks about the efforts behind the bailout of the bank and the issues he faced. Excerpts:</p>.<p><strong>How are things different today than they were a year ago?</strong></p>.<p>A year ago, there were four major problems: serious issues on the governance side; the bank wasn’t able to raise capital; there was a serious problem in the form of unrecognised and unprovided stressed assets, and there was a massive deposit outflow. In this backdrop, when the bank was about to close down, I had to deal with all these things. I also had to focus on getting employee confidence back -- they were the most harassed people. They weren’t sure of their employment and they were getting abused by customers. My immediate response was to declare the December 2019 results (which were delayed). We also launched a massive communication campaign to comfort customers and employees.</p>.<p><strong>What were your biggest challenges in the last one year?</strong></p>.<p>One was to bring back the confidence of the customers. The second was to motivate our own employees. Initially, when we were strategising, even employees were not believing that we would be able to increase our deposit base so fast... I was leading a large workforce that was demotivated.</p>.<p><strong>Read | <a href="https://www.deccanherald.com/business/the-lead-bonus-yes-bank-chief-prashant-kumar-on-the-financial-institution-958768.html" target="_blank">The Lead - Bonus: Yes Bank chief Prashant Kumar on the financial institution</a></strong></p>.<p><strong>Why was the promoter group removed from shareholding?</strong></p>.<p>When we were raising capital, we needed to have consent from the promoters. If you look at Rana Kapoor, he was a promoter only on paper with only 900 shares. So, getting consent from them did not make any sense. And also they weren’t promoters when they had sold all their shares. So that is why we went for this reclassification.</p>.<p><strong>Is Rana Kapoor’s legacy causing hindrance to you?</strong></p>.<p>The management role is that they are the employees, and RK (Kapoor) was the Promoter, MD and CEO. For any employee, it becomes very difficult to oppose such a person. I won’t say they were under his influence or his supporters; Just that they weren’t able to oppose him.</p>.<p><strong>Do you think the fiasco last year could have been better handled?</strong></p>.<p>Absolutely. There is no doubt in that. The kind of role the board should have played in 2019-20, wasn’t played by them. I have also learnt that there used to be a lot of fights in the board meetings previously and they weren’t able to reach any conclusion.</p>.<p><strong>YES Bank retail investors are visibly frustrated with the erosion in the value of their holdings. How do you calm their nerves?</strong></p>.<p>I think all of us should have that kind of understanding and patience. We should realise that the bank has gone through a phase when it was about to close, and it takes some time. Covid-19 has further impacted our loan book, but in the last three quarters, we have been able to generate a reasonable amount of operating profit. Our endeavour for next one year is that if there is a credit cost, it should be taken care of by recoveries. On the other hand, operating profit can add to our capital and shareholder return. But people need to have bit of patience.</p>.<p><strong>Banks have calculated accrued interest over the bad loans under freeze due to SC order. The verdict can go either way. How do you deal with it?</strong></p>.<p>There is no clarity. Now, we really don’t know what would be the verdict from the Supreme Court. If we are asked to classify those assets as non-performing, we will reverse the accrued interest.</p>
<p>On March 5, 2020, India witnessed its biggest banking failure as its fifth-largest lender YES Bank collapsed and had to be bailed out. In an exclusive interview with Furquan Moharkan of DH on the first anniversary of the bailout, Prashant Kumar, CEO and MD of the Bank talks about the efforts behind the bailout of the bank and the issues he faced. Excerpts:</p>.<p><strong>How are things different today than they were a year ago?</strong></p>.<p>A year ago, there were four major problems: serious issues on the governance side; the bank wasn’t able to raise capital; there was a serious problem in the form of unrecognised and unprovided stressed assets, and there was a massive deposit outflow. In this backdrop, when the bank was about to close down, I had to deal with all these things. I also had to focus on getting employee confidence back -- they were the most harassed people. They weren’t sure of their employment and they were getting abused by customers. My immediate response was to declare the December 2019 results (which were delayed). We also launched a massive communication campaign to comfort customers and employees.</p>.<p><strong>What were your biggest challenges in the last one year?</strong></p>.<p>One was to bring back the confidence of the customers. The second was to motivate our own employees. Initially, when we were strategising, even employees were not believing that we would be able to increase our deposit base so fast... I was leading a large workforce that was demotivated.</p>.<p><strong>Read | <a href="https://www.deccanherald.com/business/the-lead-bonus-yes-bank-chief-prashant-kumar-on-the-financial-institution-958768.html" target="_blank">The Lead - Bonus: Yes Bank chief Prashant Kumar on the financial institution</a></strong></p>.<p><strong>Why was the promoter group removed from shareholding?</strong></p>.<p>When we were raising capital, we needed to have consent from the promoters. If you look at Rana Kapoor, he was a promoter only on paper with only 900 shares. So, getting consent from them did not make any sense. And also they weren’t promoters when they had sold all their shares. So that is why we went for this reclassification.</p>.<p><strong>Is Rana Kapoor’s legacy causing hindrance to you?</strong></p>.<p>The management role is that they are the employees, and RK (Kapoor) was the Promoter, MD and CEO. For any employee, it becomes very difficult to oppose such a person. I won’t say they were under his influence or his supporters; Just that they weren’t able to oppose him.</p>.<p><strong>Do you think the fiasco last year could have been better handled?</strong></p>.<p>Absolutely. There is no doubt in that. The kind of role the board should have played in 2019-20, wasn’t played by them. I have also learnt that there used to be a lot of fights in the board meetings previously and they weren’t able to reach any conclusion.</p>.<p><strong>YES Bank retail investors are visibly frustrated with the erosion in the value of their holdings. How do you calm their nerves?</strong></p>.<p>I think all of us should have that kind of understanding and patience. We should realise that the bank has gone through a phase when it was about to close, and it takes some time. Covid-19 has further impacted our loan book, but in the last three quarters, we have been able to generate a reasonable amount of operating profit. Our endeavour for next one year is that if there is a credit cost, it should be taken care of by recoveries. On the other hand, operating profit can add to our capital and shareholder return. But people need to have bit of patience.</p>.<p><strong>Banks have calculated accrued interest over the bad loans under freeze due to SC order. The verdict can go either way. How do you deal with it?</strong></p>.<p>There is no clarity. Now, we really don’t know what would be the verdict from the Supreme Court. If we are asked to classify those assets as non-performing, we will reverse the accrued interest.</p>
