Responsible Banking

7/27/2019 Responsible Banking

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RESPONSIBLE BANKING

Business Solutions for Sustainable Development

Rita Soni

Country HeadResponsible Banking

YES BANK Ltd

FINANCING A SUSTAINABLE LOW CARBON INDIAN ECONOMYAn IBA, WWF-India, TCG Initiative

13 May 2010


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Mainstreaming sustainability using multi-stakeholder approach

Operate in Sustainability Zone supporting businesses that meet economic, environmental & socialobjectives

Innovative financial solutions to address gamut of development issues sustainable livelihood, foodsecurity, climate change, public health, education, information technology, biotechnology etc

Using knowledge driven approach and specialised skill sets, human resources to adapt commercialfinancial services to sustainability space.

YES BANKs Sustainability Vision

YES BANK has leapfrogged traditional philanthropy-based CSR to Responsible Bankingfinding Business Solutions to Social & Environmental Issues

Sustainability Zonecombined economic,environmental, social benefit

Pure Philanthropy

PureProfit

Sustainability Zone Evolution of Sustainability

Values over Value

Sustainability:Triple Bottom Line

New Generationof Sustainability:Integration andMainstreaming

Philanthropy focused

CSR based initiatives

Sustainability aspart of business


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Responsible Banking in Action

Microfinance

Institutions

Group (MIG)

YES SAMPANN

Direct Lending

Responsible Banking in Thought

YES

COMMUNITY

Responsible

Corporate

Citizenship (RCC)

Other Bank Divisions:

Corporate Finance

Corp. & Inst. Banking

Emerging Corporates

Business Banking

Retail Branches

Alternative

Energy &

Environment

Social

Enterprises

SUSTAINABLE INVESTMENT BANK

(SIB)Business Planning/Structur ing, M&A

Advisory, Pr ivate Placement

Clean &

Sustainable

Technologies

Deal Generation

Internal

Engagement

Deal Generation

South Asia Clea

Energy Fund

(SACEF)

MICROFINANCECredit + Services

AGRI, RURAL &

SOCIAL

BANKING (ARSB)Credit + Services

RESPONSIBLE BANKING

(CSR & Sustainability)Thought Leadership, Advisory,

Inst i tu t ional izat ion

PRIVATE

EQUITYGrowth Capital

Responsible Banking Framework


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ESP addresses social& environmental considerations and includes an exhaustive list of prohibitiveactivities 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

Appraisal of projectfinance transactionsensures adherence to

Credit Risk Policy, alongwith economic viability

Enables the Bank torecognize, evaluate, andmonitor, theenvironmental and socialfacets clients

Indicative of the walk thetalk link between theBanks sustainabilityvision and its policy &processes to substantiatethis

Environment and Social Policy (ESP)

In-Principle Approval

Site Visits

Annual Review

Monitoring ofagreed uponnorms

Project Finance Transaction Process @ YES BANK

Project Finance

Transaction Process &

Select Activ i t ies

Post DisbursementMonitoring

TransactionOrigination

Detailed Due Diligence

Risk Analysis

Legal AnalysisCompliance Check

Syndication of Loan

Final Sanction

Financial modelling andscenario analysis

Environm ent Impact Study

Government approvals

Utilities consumption (power,fuel etc)

Detailed technical due

diligence Environment and

Social Policy review

Potential projectsrejection

Adherence to laid downstandards

Compliance to regulatory norms

Focus on Banks Quality Policy

Re-review of Environm ent andSocial Policy


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Thought Leadership

CLINTON GLOBAL INITIATIVE

Corporate commitments

Education: Akanksha volunteer program

Corporate Payroll Giving: GiveIndia program

Microfinance

Social Entrepreneurship: S3IDF

Health: Malnutrition Matters and STFCL

First Indian Bank to become a Signatory

Emission disclosed for the year 2007-08 and2008-09

India Partners along with CII and WWF-India toencourage other companies for reporting

UN GLOBAL COMPACT

Only Indian Bank to be an activeSignatory

First Indian Bank to become a Signatory

Active participation in the GlobalRoundtables
http://images.google.co.in/imgres?imgurl=http://europeandcis.undp.org/uploads/public/Image/globalcompact_logo(2).bmp&imgrefurl=http://europeandcis.undp.org/poverty/psd/show/ABF08C6D-F203-1EE9-B4793C4A8E0B888A&usg=__NT03SPdzs1jRJCTyKb1Cwy1QClo=&h=330&w=349&sz=338&hl=en&start=1&tbnid=HIRcx8cvOl-8MM:&tbnh=113&tbnw=120&prev=/images?q=global+compact+logo&gbv=2&hl=en


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SELECT RESPONSIBLE BANKING INITIATIVES


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Malnutrition Matters (MM)YES BANK as Technology Transfer Agent

MMs VitaGoat employs bicycle-powered grinders

and variety of locally available fuels to prepareprotein-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 usingVitaGoat to grind Soybeans


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Microfinance Institutions Group (MIG)Multiplier Effect: The Indirect Impact

Institutes specific transactions to position microfinance as a new asset class, appealing to abroad 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 assetclass

Generated interest among institutional investors

Potential incremental access to capital for industry of USD 12-14bn annually, impacting60-70mn clients


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Zameen OrganicOvercoming the last mile

YES BANK is Zameens Sole Banking Partner

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


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Sustainable Investment BankAdvisory 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


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Responsible Banking

Business Results

ONLY private sector bank toconsistently exceed RBIs PSLtargets (in terms of agriculture specific andoverall targets)over the last three years(Source: RB Portfolio comparison using RBI data)

Consistently maintained ZERO non-performing assets (NPAs) in RBportfolio which is generally 12-13% atother banks (Source: RBI data)

Tracks at 43% of loans & advances; growthof 34% of interest income

Growth in both absolute & percentageterms from FY08

With MIG portfolio of USD 100mnreaching 1.4mn individuals, microfinance

constitutes 11.07% of RB portfolio highest among Indian commercial banks;next highest, ING at 7.55% (Source: Bank analysis ofMF Sector, using data from ACCESS Development Services & RBI)

Despite Banks 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 oncosts, institutionalizing revenue streamwhere none existed

Quality of Assets Size of Business


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Thank You!

Documents

Responsible Banking