YES Bank to boost MSME portfolio with IFC loan

MSME portfolio presently comprises 36% of its loan book, and the bank aims to increase this to 50% over the next 5 yrs

YES Bank will raise over $120 million from the International Finance Corporation (IFC). The fund-raising involves a loan of $60 million with a tenor of five to seven years from IFC's own accounts and a syndicated loan of $65 million.

The money will be used by the bank to increase its exposure to micro, small and medium enterprises (MSMEs). The MSME portfolio presently comprises 36 per cent of its loan book, and the bank aims to increase this to 50 per cent over the next five years.

YES Bank plans to grow its branch network from the present 500 branches to 750 branches by the end of 2014-15. A part of the expansion will be in the low-income states, and the expansion will primarily focus on increasing the bank's MSME, agri and retail franchise, in order to diversify its client base.

According to IFC, the loan is intended to support the bank in accessing long-term funding to improve its asset-liability maturity mismatch, grow its assets, increase its reach and improve its market share, especially in the MSME space.

IFC also said that at a time when there is almost no US dollar funding in the markets, it will help YES Bank mobilise long-term funding through syndications from its global network. With IFC as lender of record, banks would be able to extend loan tenors to up to three years, whose maturity is ideally suited to YES Bank's asset book, according to the global lender.