Yes Bank is looking to hive off its non-performing assets (NPAs) into a separate subsidiary or a “bad bank”, which will be jointly run with the support of investors who are experts in the field of turning around such stressed cases, Prashant Kumar, chief executive and managing director of the bank, said here on Monday. A bad bank is an entity that houses all the NPAs of a bank.
He was replying to a query as the private sector lender announced details of its follow-on-public offer (FPO) that seeks to raise Rs 15,000 crore at Rs 12-13 per share.
Yes Bank had gross NPAs of Rs 32,877.59 crore. The lender which has been cleaning up its books and focussing on the resolution of bad loans has submitted the proposal of such a bad bank to the Reserve Bank of India (RBI).
“We are exploring the possibility of hiving off bad loans into a separate subsidiary where investors who are experts in stressed assets will come with equity participation subject to regulatory approvals. If we get this approval, the subsidiary will be managed by professionals and any upside will be shared by the bank and the investor in proportion to the equity that they are participating,” the Yes Bank CEO said.
He said a bulk of its corporate loans were NPAs that have been placed in a separate vertical where the focus is on recovery and resolution.
HDFC plan
Mortgage lender HDFC Ltd on Monday said it is planning to raise up to Rs 45,000 crore by issuing debt securities, and will seek approval of shareholders in its upcoming AGM on July 30.
