Transcript Presentation

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 BANK’s Sustainability Vision
Sustainability Zone
Pure Profit
“Sustainability Zone”
combined economic,
environmental, social benefit
Evolution of Sustainability
New Generation
of Sustainability:
Integration and
Mainstreaming
Sustainability:
Triple Bottom Line
Sustainability as
part of business
CSR based initiatives
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
(CSR & Sustainability)
Thought Leadership, Advisory,
Institutionalization
Responsible
Corporate
Citizenship (RCC)
Internal
Engagement
Deal Generation
Other Bank Divisions:
– Corporate Finance
– Corp. & Inst. Banking
– Emerging Corporates
– Business Banking
– Retail Branches
Responsible Banking in Action
AGRI, RURAL &
SOCIAL
BANKING (ARSB)
MICROFINANCE
Credit + Services
Credit + Services
YES
COMMUNITY
YES SAMPANN
Direct Lending
Microfinance
Institutions
Group (MIG)
SUSTAINABLE INVESTMENT BANK
(SIB)
Business Planning/Structuring, M&A
Advisory, Private Placement
Alternative
Energy &
Environment
Social
Enterprises
Deal Generation
Clean &
Sustainable
Technologies
PRIVATE
EQUITY
Growth Capital
South Asia Clean
Energy Fund
(SACEF)
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
In-Principle Approval
 Financial modelling and
scenario analysis
 Environment Impact Study
 Government approvals
 Utilities consumption (power,
fuel etc)
 Site Visits
 Annual Review
 Monitoring of
agreed upon
norms
Final Sanction
Syndication of Loan
Detailed Due Diligence
Project Finance
Transaction Process &
Select Activities
Risk Analysis
 Adherence to laid down
standards
Compliance
 Compliance to regulatory norms
 Focus on Bank’s Quality Policy
 Re-review of Environment and
Social Policy
Check
Legal Analysis
 Detailed technical due
diligence
 Environment and
Social Policy review
 Potential projects
rejection
• 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
• Indicative of the “walk the
talk” link between the
Bank’s sustainability
vision and its policy &
processes to substantiate
this
Thought Leadership
CLINTON GLOBAL INITIATIVE
Corporate commitments
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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
 MM’s 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 Zameen’s Sole Banking Partner
Sustainable Investment Bank
Advisory to SME, Social & Environment Sectors
 Promotes
investments,
provides
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
 ONLY private sector bank to
consistently exceed RBI’s PSL
targets (in terms of agriculture specific and
overall targets) over the last three years
(Source: RB Portfolio comparison using RBI data)
 Consistently maintained ZERO non-
performing assets (NPAs) in RB
portfolio which is generally 12-13% at
other banks (Source: RBI data)
Size of Business
 Tracks at 43% of loans & advances; growth
of 34% of interest income
 Growth in both absolute & percentage
terms from FY08
 With MIG portfolio of USD 100mn
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 Bank’s limited rural presence,
ARSB reached 1.3mn farmers; 25% growth
year on year with portfolio of USD 547mn.
 SIB generated fee income of 2.5x cover on
costs, institutionalizing revenue stream
where none existed
Thank You!