March 17, 2020 / 12:47 PM / 16 days ago

India's Yes Bank aims to recover up to $1.35 billion of bad loans next fiscal: administrator

MUMBAI (Reuters) - Yes Bank Ltd (YESB.NS) aims to recover 85 billion-100 billion rupees ($1.15-$1.35 billion) of bad loans in the next fiscal year, its administrator said, days after India carved out a rescue plan for the debt-laden lender.

The private-sector bank is also looking at reducing its dependence on bulk deposits and will build its retail loan book to 60% from the current 40%, administrator Prashant Kumar said at a press conference in Mumbai on Tuesday.

Kumar will take over as chief executive officer next week.

Yes Bank is reeling under a mountain of bad loans due to its exposure to troubled shadow lenders and real estate companies, and suffered a loss of $2.51 billion in the December quarter. Its gross bad loan ratio surged to 18.87% in the period from 2.1% a year earlier.

Kumar said he would need to examine if there was under-reporting of bad loans at Yes Bank.

Credit cost, or the percentage of provisioning for bad loans out of total lending, would be nil for the next financial year as the recoveries would account for fresh bad loan additions of 5% as guided by the bank, Kumar added.

India had approved a rescue plan for Yes Bank last week after the central bank placed the lender under a moratorium, restricting deposit withdrawals and superseding its board. State Bank of India (SBI), the country’s largest lender, is now set to take a 49% stake in Yes Bank.

Private banks have also joined the rescue act, with ICICI Bank (ICBK.NS), Axis Bank (AXBK.NS) and Kotak Mahindra Bank (KTKM.NS) among others committing investments.

The Reserve Bank of India has also said it will step in to provide liquidity to Yes Bank, if needed. The moratorium will be lifted on Wednesday evening.

The bank has enough cash to support withdrawals, Kumar asserted, adding that there was no need for customers to worry about the safety of deposits.

Shares of Yes Bank, which plunged to a life-low of 5.65 rupees earlier this month after the RBI took control, closed up 58.09% at 58.65 rupees on Tuesday.

Reporting by Nupur Anand in Mumbai, Writing by Chris Thomas in Bengaluru, Editing by Sherry Jacob-Phillips

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