YES Bank revives plan for broking arm

YES Bank has revived its plans of foraying into securities broking and aims to start operations in the current financial year. Yes Direct, the private sector bank's first subsidiary, would offer internet broking services to its retail customers.

YES Bank had nurtured plans of setting up a broking arm since 2007. “At that stage, we had withdrawn our proposal, as we did not have the scale. Now, it is reactivated because we think we have the critical scale, mass and size to commence broking business,” Rana Kapoor, founder, managing director and chief executive officer, YES Bank, told Business Standard. “We are pursuing this with the Reserve Bank of India (RBI). If all goes well, it would happen in the latter half of this financial year,” Kapoor said.

Currently, YES Bank has 217 branches across India and plans to add another 33 branches by June. By 2015, the bank plans to increase the number of branches to 750.

Major private banks in India have already established their presence in retail broking. While ICICI Bank's arm ICICI Direct conducts retail broking operations, HDFC Bank and Kotak Mahindra Bank run their broking business through HDFC Securities and Kotak Securities, respectively. In November, Axis Bank had acquired the equities and investment banking business of Enam Securities for Rs 2,067 crore. The bank now offers retail broking services under the brand Axis Direct.

Kapoor said Yes Bank’s decision to foray into retail broking business was primarily to complement its savings deposit products. “Today, a broking account is integral to savings products. So, for us, it is more a strategy to mobilise savings and (we are) not necessarily (looking at) a standalone broking business,” he said.

The bank is likely to start broking operations on its own and is unlikely to consider acquisitions and partnerships, as some of its competitors had. “Ideally, we would want to do this on our own. Technology is fairly template-driven. So, it is not a very big investment. It will be a low-cost, in-house model,” Kapoor said, adding the broking subsidiary would fall under a holding company, once the RBI came out with guidelines on banks' holding companies. RBI is expected to introduce guidelines on banks' holding companies to insulate lenders from the operational risks of subsidiaries within a group.

Yes Bank also plans to set up Yes Foundation, through which, it plans to carry out several social initiatives. “It will be a Section 25 company. We will be the single-largest stakeholder there. But we will also invite other co-stakeholders and investors to build a larger proposition,” Kapoor said.