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NEW DELHI: Private sector lender Yes Bank’s plan to set up an asset reconstruction company is on track and it expects to transfer all its bad loans to the entity by end of June, chief executive Prashant Kumar said on Saturday.
“The process to form the asset reconstruction company (ARC) and complete the transfer of legacy stressed assets is on track and we expect to complete this by the end of the current quarter,” Kumar said.
As on 31 March, Yes Bank’s gross bad loans stood at ₹27,976 crore.
In August last year, Yes Bank had invited expressions of interest to set up the asset reconstruction company (ARC), where it plans to own a 20% stake. The Reserve Bank of India (RBI) had earlier rejected Yes Bank’s application to start an ARC, citing conflict of interest. Following this, the mid-sized private bank tweaked the structure of the proposed ARC, offering to hold a minority stake and find more shareholders to overcome the regulatory hurdle.
Mint had earlier reported that the private lender is in discussions with American distressed assets investors JC Flowers & Co. and Cerberus Capital. However, Cerberus Capital is understood to have put the higher bid of close to ₹12,000 crore for the assets.
“The way we are moving ahead (with regard to the ARC) is in line with the regulatory requirements. There is no disconnect between these two things,” said Kumar.
He said the bank was not trying to sell any of its assets to other asset reconstruction companies but trying to have a partner to form an ARC where the stressed pool of the bank can be transferred in a transparent manner.
Mint reported on 22 April that Yes Bank was exploring options to sell more than ₹5,000 crore worth of bad loans to the newly-created National Asset Reconstruction Co. Ltd (NARCL).
On Saturday, the bank posted a net profit of ₹367 crore, as against a loss of ₹3,788 crore in March quarter of the previous financial year. Its gross non-performing assets (NPAs) as a percentage of total advances stood at 13.9% as on 31 March, down 150 basis points (bps) y-o-y and 80 bps lower than the previous quarter.
“Yes Bank has returned to profitability with a full year profit of ₹1,066 crore, first full year profit since FY19, as against a loss of ₹22,715 crore in FY20 and a loss ₹3,462 crore in FY21,” said Kumar.
The bank, he said, is the go-to digital bank, powering nearly every third digital transaction in the country. This has enabled us to be a banker to a majority of fintechs and e-commerce companies in India, Kumar said.
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