RESPONSIBLE BANKING
Business Solutions for Sustainable Development
Rita Soni Country Head Responsible Banking YES BANK Ltd FINANCING A SUSTAINABLE LOW CARBON INDIAN ECONOMY An IBA, WWF-India, TCG Initiative 13 May 2010
YES BANKs Sustainability Vision
Sustainability Zone Evolution of Sustainability New Generation of Sustainability: Integration and Mainstreaming Sustainability: Triple Bottom Line
CSR based initiatives Sustainability as part of business
Pure Profit
Sustainability Zone combined economic, environmental, social benefit
Values over Value
Pure Philanthropy
Philanthropy focused
Mainstreaming sustainability using multi-stakeholder approach Operate in Sustainability Zone supporting businesses that meet economic, environmental & social objectives Innovative financial solutions to address gamut of development issues sustainable livelihood, food security, climate change, public health, education, information technology, biotechnology etc Using knowledge driven approach and specialised skill sets, human resources to adapt commercial financial services to sustainability space.
YES BANK has leapfrogged traditional philanthropy-based CSR to Responsible Banking finding Business Solutions to Social & Environmental Issues
Responsible Banking Framework
Responsible Banking in Thought Responsible Banking in Action
RESPONSIBLE BANKING (CSR & Sustainability)
Thought Leadership, Advisory, Institutionalization
AGRI, RURAL & SOCIAL BANKING (ARSB)
Credit + Services
MICROFINANCE
Credit + Services
SUSTAINABLE INVESTMENT BANK (SIB)
Business Planning/Structuring, M&A Advisory, Private Placement
PRIVATE EQUITY
Growth Capital
Responsible Corporate Citizenship (RCC)
Internal Engagement
YES COMMUNITY
YES SAMPANN Direct Lending
Microfinance Institutions Group (MIG)
Alternative Energy & Environment
Social Enterprises
Clean & Sustainable Technologies
South Asia Clean Energy Fund (SACEF)
Deal Generation
Deal Generation
Other Bank Divisions: Corporate Finance Corp. & Inst. Banking Emerging Corporates Business Banking Retail Branches
Environment and Social Policy (ESP)
ESP addresses social & environmental considerations and includes an exhaustive list of prohibitive activities as well such as production or trade in weapons Embedded in Bank-wide Credit Risk Policy Benchmarked against key sustainability financing principles of multilateral & bilateral agencies such as the World Bank group, the Asian Development Bank and the Equator Principles
Project Finance Transaction Process @ YES BANK
Transaction Origination Post Disbursement Monitoring
Site Visits Annual Review Monitoring of agreed upon norms
In-Principle Approval
Financial modelling and scenario analysis Environment Impact Study Government approvals Utilities consumption (power, fuel etc)
Appraisal of project finance transactions ensures adherence to Credit Risk Policy, along with economic viability Enables the Bank to recognize, evaluate, and monitor, the environmental and social facets clients
Final Sanction Syndication of Loan
Project Finance Transaction Process & Select Activities
Detailed Due Diligence
Detailed technical due diligence Environment and Social Policy review Potential projects rejection
Risk Analysis
Adherence to laid down standards Compliance Compliance to regulatory norms Focus on Banks Quality Policy Re-review of Environment and Social Policy
Check
Legal Analysis
Indicative of the walk the talk link between the Banks sustainability vision and its policy & processes to substantiate this
Thought Leadership
CLINTON GLOBAL INITIATIVE
Corporate commitments
Education: Akanksha volunteer program Corporate Payroll Giving: GiveIndia program Microfinance Social Entrepreneurship: S3IDF Health: Malnutrition Matters and STFCL
UN GLOBAL COMPACT
Only Indian Bank to be an active Signatory
First Indian Bank to become a Signatory Emission disclosed for the year 2007-08 and 2008-09 First Indian Bank to become a Signatory Active participation in the Global Roundtables India Partners along with CII and WWF-India to encourage other companies for reporting
SELECT RESPONSIBLE BANKING INITIATIVES
Malnutrition Matters (MM)
YES BANK as Technology Transfer Agent
MMs VitaGoat employs bicycle-powered grinders and variety of locally available fuels to prepare protein-rich soy products like soy yogurt, tofu, and milk as a lower cost, nutritious alternative to milk Results:
VitaGoat deployed at Buldana Urban Co-operative Credit Society run residential school since 2007
700 school children fed daily with soy milk/paneer
Vigyan Ashram, MM & YBL to develop ultra low-cost soymilk system for microentrepreneurs, enabling greater outreach Expansion to Rajasthan with the delivery of first VitaGoat to Seva Mandir in Jan 2010 Expected to serve ~300-400 people per day
Seva Mandir employee using VitaGoat to grind Soybeans
Microfinance Institutions Group (MIG)
Multiplier Effect: The Indirect Impact
Institutes specific transactions to position microfinance as a new asset class, appealing to a broad base of investors and lenders, expanding access to capital FIRST Indian bank to undertake innovations in capital market products for microfinance:
o Capital Market Products
Banks have been main source of debt funding for MFIs (term loans) Term loans are relatively expensive they are illiquid YES BANK arranged first rated bond issuance of an MFI in the world in the form of Commercial Paper & Non-Convertible Debentures of INR 2000 mn (USD 40 mn) Enabled cost reduction for the MFI to the extent of 300 bps o Structured Products Securitisation of receivables originated by MFI
MFI receivables recognised as an asset class
Generated interest among institutional investors Potential incremental access to capital for industry of USD 12-14bn annually, impacting 60-70mn clients
Zameen Organic
Overcoming the last mile
Fair trade supported company owned by Small Farmers Organizations Network of 6,000 small farmers producing organic cotton in the Vidharbha (Maharashtra) and Adilabad (Andhra Pradesh) regions Provides vital processing and marketing linkage between organic farmers and branding companies Unique concept of Premium: Farmer Premium and Community Premium
YES BANK is Zameens Sole Banking Partner
Sustainable Investment Bank
Promotes investments, provides
Advisory to SME, Social & Environment Sectors
advisory services & facilitates growth capital for social & environment focused enterprises Asmitha Microfinance Ltd raised USD 10mn for one of top five Indian MFI serving ~1.16 mn clients, through private placement of equity Gradatim IT Ventures - raised USD 3mn growth capital enabling MFI access to technological interventions that increase operational efficiencies and reduce costs
Responsible Banking
Business Results
Quality of Assets Size of Business
ONLY private sector bank to
consistently exceed RBIs PSL targets (in terms of agriculture specific and overall targets) over the last three years
(Source: RB Portfolio comparison using RBI data)
Tracks at 43% of loans & advances; growth
of 34% of interest income terms from FY08
Growth in both absolute & percentage
With MIG portfolio of USD 100mn
Consistently maintained ZERO non-
performing assets (NPAs) in RB portfolio which is generally 12-13% at other banks (Source: RBI data)
reaching 1.4mn individuals, microfinance constitutes 11.07% of RB portfolio highest among Indian commercial banks; next highest, ING at 7.55% (Source: Bank analysis of
MF Sector, using data from ACCESS Development Services & RBI)
Despite Banks limited rural presence,
ARSB reached 1.3mn farmers; 25% growth year on year with portfolio of USD 547mn.
costs, institutionalizing revenue stream where none existed
SIB generated fee income of 2.5x cover on
Thank You!
