YES Bank to raise $125 mn from IFC

The money will be used by the bank to increase its exposure to MSMEs

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YES Bank would raise $125 million from the International Finance Corporation (IFC). The funds, to be used to increase the bank’s exposure to the small and medium enterprise (SME) segment, would comprise a five-seven year senior loan of $60 million from its own accounts and a syndicated loan of $65 million. IFC said the project was aimed at supporting the bank in providing access to funding and diversifying its funding base franchise, etc.

Improving its maturity mismatch position and increasing assets; and improving its market share, especially in the SME and micro, small and medium enterprises space. It added the credit line would enable YES Bank to use its network and execution capabilities to serve the high-priority customers that IFC couldn’t reach on its own.

The World Bank arm said at a time when there was little dollar funding in the markets, it would help YES Bank mobilise long-term funding through syndication from its global network.

“With the IFC as a lender of record, banks would be able to extend tenures to up to three years, which is ideally suited to the asset book of YES Bank,” IFC said.

YES Bank’s short-term liabilities exceed its short-term assets. To bridge this gap, the bank has to increase its long-term funding.

Founded in 2004, YES Bank is India’s fourth-largest private sector bank, with an asset base of $18 billion. It has a branch network of about 500, across 350 cities. The bank has about 1,100 automated teller machines.

Through the last five years, the bank’s loan book grew at a compounded annual rate of 38 per cent.