AT THE HELM
Prashant Kumar, CEO, Yes Bank
- IBJ Bureau
- Mar 01, 2021
This March, it will be a year since Prashant Kumar took charge of troubled Yes Bank. In early March 2020, the Reserve Bank of India (RBI) imposed a moratorium on the Mumbai-headquartered, private sector lender as depositors lined up to withdraw their deposits. The one-month moratorium on Yes Bank limited depositors to withdraw only up to Rs 50,000 per account.
The RBI’s drastic steps followed alleged misgovernance at Yes Bank, resulting in the lender facing severe liquidity crisis amid mounting bad loans. The bank’s non-performing assets (NPAs) had crossed over Rs 40,700 crore, accounting for nearly a fifth of its loan book.
The RBI superseded Yes Bank’s board headed by Rana Kapoor, its co-founder and former chairman. The central bank appointed Mr Kumar – the then deputy managing director and chief financial officer (CFO) of State Bank of India (SBI) – as the administrator of Yes Bank.
The RBI got SBI and seven other lenders to acquire a combined 79 per cent stake in Yes Bank last March. That helped stabilise the situation and partially restore confidence of depositors in the distressed lender. With a semblance of order restored, Mr Kumar, 59, was tasked with getting Yes Bank back into business. Donning the role of managing director and CEO of the troubled private bank, Mr Kumar began cleaning up the mess step by step.
The first task for the new Yes Bank chief was to restore the faith of the bank’s depositors. The lender had suffered an outflow of more than Rs 1,04,000 crore in the six months through March 2020, about half of its total deposits. Mr Kumar recalls that he had set aside an hour a day during the first two months to call depositors to reassure them personally about the bank’s stability.
The other task at hand was to tackle the piling NPAs at the private lender. Soon after taking charge, Mr Kumar created a separate stressed-assets team with 100 employees. He even separated departments that originated loans, assessed risk and resolved stressed assets to reinforce administration. Besides, Yes Bank succeeded in raising $2 billion of additional equity capital, albeit at a 55 per cent discount to market price last July, reassuring the bank’s depositors and investors.
So, a year after Mr Kumar took charge, Yes Bank reported a net profit of Rs 150.71 crore for the third quarter ended December 2020 as against a record loss of Rs 18,654 crore in the year-ago quarter. The bank’s gross NPAs as a percentage of assets eased to 15.36 per cent compared with 18.87 per cent during the period under review.
Yes Bank’s turnaround, in the meanwhile, is progressing at a promising pace. And the due credit for that should undoubtedly go to Mr Kumar. The seasoned banker, who had joined SBI way back in 1983 as a probationary officer, had handled various roles at SBI, including credit, human resources and training systems, among others. The science and law graduate from Delhi University had also served as chief general manager of SBI’s Kolkata and Mumbai circles. Yes Bank certainly seems to be in the safe hands of Mr Kumar, the veteran banker with an inspiring track record.