To The Members
The Directors are pleased to present the Sixteenth Annual Report on the business andoperations of the Bank together with the audited financial statements (consolidated aswell as standalone) for the year ended March 31 2020.
Towards the end of the year YES BANK underwent a significant transition with thesupersession of the erstwhile Board pursuant to Section 36ACA of the Banking RegulationAct 1949 (the BR Act) and constitution of the new Board under the YES Bank LimitedReconstruction Scheme 2020 ("YBL Reconstruction Scheme"). Mr. Sunil Mehta wasinducted on the Board as the Non-Executive Chairman and Mr. Prashant Kumar as the newManaging Director and Chief Executive Officer (MD & CEO).
The year began on a positive note with Mr. Ravneet Gill taking charge as MD & CEOwith effect from March 1 2019. The erstwhile Board of Directors introduced a morebalanced mix in the credit authority delegated to the Management and Board CreditCommittees alongside exercising greater prudence towards income recognition. Severalmeasures to strengthen governance risk management control and compliance frameworksincluding top management inductions were adopted.
The Bank successfully raised Rs.1930 crore via a Qualified Institutions Placement(QIP) issue in August 2019 up for 10% dilution as approved by shareholders.
In many ways this can be described as a year of headwinds wherein the Bank reported anet loss of Rs.16418.02 crore with Gross NPAs at 16.80% impacted by higher recognitionof NPAs from concentrated exposures to stressed corporate groups.
Since October 2019 the Bank witnessed a deposit outflow owing to a delay in raisingcapital impacting the liabilities franchise. This got further accelerated after theReserve Bank of India (RBI) imposed moratorium was lifted with deposits of Rs.105363.94crore at year end. However the Bank continued its efforts towards building a strongerretail franchise. Contribution of retail advances compared to TOTAL advances increased to25% in FY 2019-20 compared to 17% in FY 2018-19. Digitisation remains among the Bank Rs. skey focus areas to grow the Retail and MSME segments and the Transaction
Banking business. The Bank has significant presence within the new-age payments spacewith the highest market share of 31% in UPI P2M transactions in FY 2019-20.
YES BANK LIMITED RECONSTRUCTION SCHEME 2020
The Reserve Bank of India (RBI) vide its press release 2019-2020/2022 dated March 52020 applied to the Central Government under Section 45(1) of the BR Act for imposing aMoratorium on the Bank and accordingly the Central Government had placed the Bank underMoratorium as per the notification numbered S.O. 993(E) dated March 5 2020 issued by theMinistry of Finance (Department of Financial Services) (BANKING DIVISION) under Section45(2) of the BR Act.
Simultaneously through another press release numbered 2019-2020/2025 dated March 52020 and in exercise of the powers conferred under Section 36ACA of the BR Act the RBIin consultation with Central Government superseded the Bank Rs. s Board and in interimShri Prashant Kumar ex-DMD and CFO of the State Bank of India was appointed as theAdministrator under Section 36ACA (2) of the BR Act. He was vested with powers functionsand duties of the Board and assumed office on March 6 2020.
RBI on March 6 2020 in exercise of the powers conferred on it by Section 45(4) ofthe BR Act prepared a draft scheme for reconstruction. In terms of Section 45(6)(b) ofthe BR Act the draft scheme was placed on RBI website for suggestions and objections ifany from members depositors or creditors of the Bank by March 9 2020.
Subsequently the Ministry of Finance Government of India notified the YES BankLimited Reconstruction Scheme 2020 (YBL Reconstruction Scheme) vide a notificationnumbered G.S.R. 174(E) dated March 13 2020 which came into force on March 13 2020.
As a part of this scheme the Bank received an equity infusion of Rs.10000 crore fromeight Indian financial institutions namely State Bank of India Housing DevelopmentFinance Corporation Limited ICICI Bank Limited Kotak Mahindra Bank Limited Axis BankLimited IDFC First Bank Limited Federal Bank Limited and Bandhan Bank Limited. Afterinfusion of capital under the Scheme State Bank of India ( Rs. SBI Rs. ) was holding4821% in the share capital of the Bank and holding of SBI will not reduce below 26%before completion of three years from the date of allotment.
Further in accordance with the terms of the Scheme there shall be a lock-in period ofthree years from the commencement of the Scheme to the extent of seventy-five per cent inrespect of-
(a) Shares held by existing shareholders on the date of commencement of the scheme i.e.March 13 2020
(b) Shares allotted to the investors (as defined) under the scheme
Provided that the said lock-in period does not apply to shareholders holding less thanone hundred shares
STATE OF THE AFFAIRS OF THE BANK
The Bank is actively pursuing robust recalibration to create increased value forcustomers. The year 2019-20 was the most significant in the Bank Rs. s lifecycle. The Bankis working to build a stronger Bank with the novel insights and expertise that the newleadership brings to the table.
Operationally the Bank is happy to share that (1) the Provision Coverage Ratio (PCR)of the Bank increased to 73.8% from 43.1% in FY 2018-19 the highest among peer banks (2)higher PCR enhances the ability to offload these assets from the balance sheet to furtherrelease the capital (3) operating profits and sell downs will enable organic capitalacceleration.
Some key strategic objectives that the Bank will focus on are:
1. Strengthen governance and underwriting framework
2. Rebuild liabilities and liquidity buffers
3. Optimise operating costs
4. Resolving stressed asset concerns
1. Stable liability mix and lower cost of funds: CASA Ratio>40%
2. Granular advances: Retail/MSME>60%
3. Corporate flows and cross sell through Transaction Banking
4. ROA>1% (1-3 years) and ROA>1.5% (3-5 years)
For the new financial year shareholders may expect the following:
Credit opportunity in India with secular tailwinds
Market consolidating with banks that have stronger parentage
Technology as a key enabler in enhancing customer experience
Structural shift in household savings from physical to financial assets
Private sector banks gaining market share
COVID-19 impact with expected revival in the second half.
FINANCIAL PERFORMANCE (STA NDALONE)
| || || ||(Rs. in million) |
|Particulars ||April 1 2019 to March 31 2020 ||April 1 2018 to March 31 2019 ||Change |
|Deposits ||1053639.43 ||2276101.82 ||-1222462.38 |
|Borrowings ||1137905.03 ||1084241.09 ||53663.94 |
|Advances ||1714432.94 ||2414996.02 ||-700563.08 |
|TOTAL Assets/Liabilities ||2578269.23 ||3808261.65 ||-1229992.43 |
|Net Interest Income ||68052.31 ||98090.31 ||-30038.00 |
|Non Interest Income ||34414.94 ||45901.53 ||-11486.59 |
|Operating profit ||35175.14 ||81349.07 ||-46173.93 |
|Provisions and Contingencies ||327584.34 ||57775.60 ||269808.74 |
|Profit before Tax ||(292409.20) ||23573.47 ||-315982.67 |
|Provision for taxes ||(65259.44) ||6370.68 ||-71630.13 |
|Net Profit/(Loss) from Ordinary Activities after tax ||(227149.76) ||17202.79 ||-244352.54 |
|Extraordinary income (net of tax)- AT 1 write down ||62969.45 ||- ||62969.45 |
|NET PROFIT ||(164180.31) ||17202.79 ||-181383.10 |
|Add: Surplus/(Deficit) brought forward from last period ||107595.60 ||103753.02 ||3842.58 |
|Amount available for appropriation Appropriations ||(56584.71) ||120955.80 ||-177540.52 |
|Statutory Reserve under section 17 of the Banking Regulation Act 1949 ||- ||4300.70 ||-4300.70 |
|Capital Reserve ||6655.51 ||1010.10 ||5645.41 |
|Investment Reserve ||147.23 ||6.71 ||140.52 |
|Investment Fluctuation Reserve ||- ||539.07 ||-539.07 |
|Dividend and Dividend Tax paid ||5586.43 ||7503.64 ||-1917.21 |
|Surplus carried to Balance Sheet ||(68973.88) ||107595.60 ||-176569.48 |
|Key Performance Indicators (excluding AT 1 write down) || || || |
|Net Interest Margin ||2.2% ||3.2% || |
|Return on Annual Average Assets ||-7.11% ||0.50% || |
|Return on Equity ||-113.13% ||6.53% || |
|Cost to Income Ratio ||65.67% ||43.50% || |
The Bank posted Net Loss of Rs.164180.31 million as a compared to gain of Rs.17202.79million for the FY 2018-19. Net Interest income (NII) of the Bank decreased by 30.6% toRs.68052.31 million during FY 2019-20 as compared to Rs. 98090.31 million during FY2018-19. The Net Interest Margin (NIM) was 2.2% in FY 2019-20. Please refer to the sectionon Financial and Operating Performance in the Management Discussion and Analysis for adetailed analysis of financial data.
The Bank has made loss during the year and as a consequence to that the Bank has notdeclared any dividend. Further the Reserve Bank of India vide its circular dated April17 2020 has informed all banks not to make any further dividend payouts from profitpertaining to financial year ended March 31 2020 until further instructions with theview to conserve capital in the environment of heightened uncertainly caused by COVID-19.
As required under Regulation 43A of Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 ("SEBI ListingRegulations") the dividend policy of your Bank is available on the Bank Rs. s websiteat the link: https://www.yesbank.in/about-us/corporate-governance.
TRANSFER TO RESERVES
As per requirement of RBI regulations the Bank has transferred the following amount tovarious reserves during Financial Year ended March 31 2020:
|Amount transferred to ||Rs. in million |
|Statutory Reserve (the Bank incurred a loss of Rs.164180.31 million) ||- |
|Capital Reserve ||6655.51 |
|Investment Reserve ||147.23 |
TRANSFER OF EQUITY SHARES UNPAID/ UNCLAIMED DIVIDEND TO THE INVESTOR EDUCATION ANDPROTECTION FUND
In accordance with the applicable provisions of the Companies Act 2013 read with Rulesmade thereunder the Bank has transferred to the credit of the Investor Education andProtection Fund ( IEPF) set up by the Government of India 17538 number of equity sharesand dividend amount of Rs.1431976 which had remained unclaimed/ unpaid for a period ofseven (7) consecutive years.
CAPITAL RAISING & CAPITAL ADEQUACY RATIO (CAR)
During the financial year ended March 31 2020 the Bank has successfully completedcapital raising of Rs.19304.65 million by way of Qualified Institutions Placement (QIP)by issuing 231055018 equity shares of Rs.2 each at an issue price of Rs.83.55 perequity share including premium of Rs.81.55 per equity share.
During the year under review the Bank has also issued 4384174 equity shares of Rs.2each pursuant to the exercise of stock options aggregating to Rs.8.77 million.
Further in terms of the YBL Reconstruction Scheme and Order of Administrator datedMarch 14 2020 the Bank issued and allotted 10000 million Equity Shares of Rs.2 each ata premium of Rs.8 per share aggregating to Rs.100000 million to Banks/financialinstitutions as mentioned hereinbefore under the YBL Reconstruction Scheme.
Post allotment of aforesaid equity shares the issued subscribed and paid up sharecapital of the Bank stands at Rs.25100.94 million comprising of 12550472231 equityshares of Rs.2 each fully paid as on March 31 2020.
The Bank has not issued any equity shares with differential voting rights during theyear.
In terms of the YBL Reconstruction Scheme and the Order of Administrator of YBL thePerpetual Subordinated Basel III Compliant Additional Tier I Bonds issued by the Bank foran amount of Rs.3000 crores and Rs.5415 crores on December 23 2016 and October 182017 respectively were fully written down and extinguished w.e.f. March 14 2020. Thebondholders and Axis Trustee Services Ltd. have filed a Writ Petition against the saidaction before the Honble Bombay High Court and Madras High Court. The matter is currentlysub judice.
Capital Adequacy Ratio of your Bank stood at 8.5% as at March 312020; of which Tier ICapital Ratio was 6.5% and Tier II Capital Ratio was 2.0%. As Tier I ratio of the Bank wasbelow the regulatory minimum requirements and hence as per RBI guidelines Tier II ratioof 6.37% is restricted to 2%.
CHANGE IN THE AUTHORIZED SHARE CAPITAL OF THE BANK
During the year under review the Authorised Share Capital of the Bank was increased(i) from Rs.800 crore to Rs.1100 crore by addition of 150 crore equity shares of Rs.2 eachas per the resolution passed by the shareholders at the extra ordinary general meetingheld on February 07 2020 and (ii) from Rs.1100 crore to Rs.6200 crore by addition of2550 crore equity shares of Rs.2 each pursuant to the YBL Reconstruction Scheme w.e.f.March 13 2020.
amendment to charter documents
During the year under review the Memorandum of Association was altered for increase inAuthorized Share Capital as above and the Articles of Association was amended under theYBL Reconstruction Scheme by deletion of Article Nos. 110 (b) Article 127 (b) Article127A (a) and Article 127A (b) which were confirming special rights to the promoters of theBank.
reclassification of promoter/promoter group
The YBL Reconstruction Scheme inter-alia provided for fresh capital infusionappointment of new Board of Directors of the Bank and deletion/omission of certainarticles from the Articles of Association of the Bank ("AoA") which had theeffect of negating / nullifying the special rights conferred on the Promoters/PromoterGroup under the AoA.
Post implementation of the Scheme (i) the combined shareholding of the Rana KapoorGroup and Madhu Kapur Group (the erstwhile promoters of the Bank) came down to 1.42% ofthe TOTAL paid up equity share capital of the Bank; (ii) they no longer continued toexercise control over the affairs of the Bank directly and/or indirectly (iii) they donot have any special rights with respect to the Bank through formal and/ or informalarrangements including through any shareholder agreements; (iv) they were not representedon the Board of Directors of the Bank (including through any nominee director); and (v)they do not act as key managerial personnel in the Bank. Considering the said fact anapplication was made to the Stock Exchanges for Reclassification of the Promoter andPromoter Group of the Bank. Simultaneously the Bank also made an application underRegulation 102 of the Listing Regulations to Securities & Exchange Board of India(SEBI) for exemption of applicability of certain provisions of Regulation 31A of theListing Regulations.
The Madhu Kapur Group had submitted express consent to the Bank to reclassify theirshareholding in the Bank as Non-Promoter Shareholders (i.e. Public Shareholders) whereasRana Kapoor Group holds meagre 900 shares in the Bank.
Based on the application and representation made by the Bank SEBI vide its letterdated June 09 2020 granted the exemptions as sought by the Bank from the applicability ofsub-regulation (3) and (4) of Regulation 31A and clause (a) & (b) of sub-regulation(8) of Regulation 31A of Listing Regulations for reclassification of the Promoter andPromoter Group as the re-classification was a procedural formality and a consequence ofthe YBL Reconstruction Scheme and gave certain directions to the Bank in this regard.Following the SEBI letter the stock exchanges have conveyed their approval forreclassification of the following Promoter Shareholders to Non-Promoter Shareholders.(i.e. Public Shareholders) in their communications dated June 12 2020:
1. Rana Kapoor
2. Madhu Kapur
3. Morgan Credits Private Limited
4. Yes Capital (India) Private Limited
5. Mags Finvest Pvt Ltd
Consequent to the above as on date the Bank do not have any identified Promoter(s).
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report for the year under review as stipulatedin Listing Regulations is presented in a separate section forming part of the AnnualReport.
RISK MANAGEMENT FRAMEWORK
The Banks Enterprise Risk Management framework encompasses the following:
Risk Governance Framework: The Bank has implemented an Enterprise RiskGovernance framework to ensure non-silo based management and oversight of Risk. The BanksRisk Management philosophy is guided by the Three Lines of Defence:
- First Line of Defence - Business Management: Each business segment of the Bank hasrisk ownership and is responsible for assessment and management of risks and has theoverall responsibility of the management and mitigation of the Risk. The segments arerequired to implement appropriate procedures to fulfil their risk governanceresponsibilities.
- Second Line of Defence - Independent functions: The Banks independent oversightfunctions such as Risk Management Credit Underwriting
Compliance Legal Fraud Containment Unit etc. set standards for management andoversight of risks including compliance with applicable laws regulatory requirements andpolicies.
Risk Management: Risk Management establishes policies and guidelines for riskassessment and management and contributes to controls and tools to manage measure andmitigate risks faced by the Bank.
Credit Underwriting: The Credit team ensures an independent assessment of creditproposals and is responsible for monitoring the credit quality of the Banks portfolio andundertaking portfolio reviews.
Compliance: The Compliance unit manages adherence to regulatory guidelines.
Legal: Legal Risk Management Department ("LRM") of the Bank undertakesvarious activities including advising business and operational management teams within theBank on various legal issues faced by them in their day to day business activities/various contracts entered by them with counter parties/customers etc. LRM acts as anindependent control function while providing legal guidance ensuring legal complianceassisting the Board and Committees of the Board regarding analysis of laws andregulations regulatory matters disclosure matters and potential risks and exposures onkey litigation and transactional matters. LRM is also responsible for setting-up broadinternal guidelines practices and procedures to meet the requirements of alllegal/statutory authorities and ensure continuing enforceability of the variouscontracts/agreements entered by the Bank with its various constituents & counterparties. LRM is also responsible for monitoring and following up on legal claims made byand against the Bank and in this regard closely interact with external law firms.
Finance: The Finance vertical provides key data and consultation to facilitatesound decisions in support of the objectives of the Bank and the business verticals.Finance serves as an independent control function advising business management andestablishing policies or processes to manage risk.
Financial Markets: The Banks Financial Markets unit plays a very critical roleby providing Risk Management solutions relating to foreign currency and interest rateexposures of its corporate clients. Financial Markets also conducts proprietary tradingacross fixed income and global foreign exchange markets. Additionally it is responsiblefor Balance Sheet Management which includes Optimum Liquidity Management to minimize cost& maximize yield Maintenance of Regulatory Reserves requirements and day-to-day fundmanagement of the Bank. Subordinated and hybrid debt capital for the Bank is also raisedby the Financial Markets Group.
FCU & AML: The Fraud Containment Unit (FCU) is responsible for preventionand detection of internal and external frauds in the areas of Liabilities Product andSupport functions. The unit conducts transaction monitoring forensic scrutiny employeeawareness trainings and vulnerability assessments to help achieve the said objective. TheAnti Money Laundering Unit (AML) is responsible for identifying and reporting ofsuspicious transactions as prescribed under PMLA Act/Regulators across all Businesssegments of the Bank. The AML unit is equipped with qualified trained and experiencedstaff which monitors various transactions undertaken by customers with a view to combatfinancial crimes and prevents misuse of the accounts for money laundering.
- Third Line of Defence - The Banks Internal Audit function independently reviewsactivities of the first two lines of defence based on a risk-based audit plan andmethodology approved by the Audit Committee of the Board. Internal Audit providesindependent assurance to the Board Audit Committee senior management and regulatorsregarding the effectiveness of the Banks governance and controls framework designed forrisk mitigation.
The Board of Directors of the Bank has overall responsibility for Risk Management. TheBoard oversees the Banks Risk and related control environment reviews and approves thepolicies designed as part of overseeing the Risk Management practices. The Board ensuresthat comprehensive policies systems and controls are in place to identify monitor andmanage material risks at a Bank-wide level with clearly defined risk limits. The Boardhas laid down a Risk Appetite framework which articulates the quantum of risk the Bank iswilling and able to assume in its exposures and business activities in pursuit of itsstrategic objectives and desired returns. The Board has also established policiesgoverning risk management such as Credit Policy Asset & Liability ManagementPolicy Operational Risk Management Policy Information Security Policy Enterprise RiskManagement Policy Reputation Risk Management Policy Group Risk Management Policy ModelRisk & Governance Policy etc.
The Board has put in place four Board level Committees which inter-alia pertain to RiskManagement viz. Risk Management Committee (RMC) Audit Committee of the Board (ACB)Fraud Wilful Defaulters and Non-Cooperative Borrowers Monitoring Committee (FWD &NCBMC) and Board Credit Committee (BCC) to deal with risk management practices policiesprocedures and to have adequate oversight on the risks faced by the Bank.
The Board Committees have set up various Executive level committees for oversight overspecific risks.
1. Apex Management Committee
2. Enterprise Risk Reputation Risk Model Assessment Committee
3. Management Credit Committee
4. Executive Credit Committee
5. Retail and Business Banking Credit Committee
6. Asset & Liability Management Committee
7. Operational Risk Management Committee
8. Standing Committee on Customer Service
9. Fraud Control & Suspicious Transaction Monitoring Committee
10. Committee for Classification of Wilful Defaulters
11. Accountability Review Committee
12. Whistle Blower Disciplinary and Internal Committee
13. Steering Committee for IFRS (Ind AS)
14. Product Process Approval Committee
15. IT Steering Committee
16. Security Council
17. Stressed Asset Monitoring Committee
18. Sustainability Council
These Committees review various aspects / key risks and ensure that the best-in-classframeworks are in place to oversee day-to-day management of underlying businessactivities transactions and associated risks while dealing with internal and externalstakeholders. Further Risk events potential threats performance of the Bank vis-avisRisk Limits and Risk Appetite Risk Profile dashboard covering key risk indicators etc.are presented to these Committees with Q-o-Q/Y-o-Y trends highlighted with level anddirection of risk. The Bank also conducts a detailed Internal Capital Adequacy AssessmentPolicy (ICAAPR) review exercise to identify its Risk universe internal controls andmitigation measures in place for the risks and capital requirements for identified risks.The ICAAP findings are presented to the RMC and the Board.
Additionally in line with best Risk Governance practices the Bank has furtherstrengthened the functioning of credit underwriting and risk management units by creatingseparate verticals - an underwriting vertical consisting of Credit Units headed by theChief Credit Officer (CCO) and a risk controls and policy vertical consisting of variousindependent control units headed by the Chief Risk Officer (CRO). The CRO reports to theRisk Management Committee while the CCO reports to the MD&CEO.
Being a banking company the disclosures required as per Rule 8(5)(v) & (vi) of theCompanies (Accounts) Rules 2014 read with Sections 73 and 74 of the Companies Act 2013are not applicable to your Bank.
DIVERGENCE IN ASSET CLASSIFICATION AND PROVISIONING FOR NPAs
In terms of the RBI circular no. DBR.BP.BC.No.32/21.04.018/2018-19 dated April 12019banks are required to disclose the divergences in asset classification and provisioningconsequent to RBIs annual supervisory process in their notes to accounts to the financialstatements wherever either or both of the following conditions are satisfied:
(a) the additional provisioning for NPAs assessed by RBI exceeds 10 per cent of thereported profit before provisions and contingencies for the reference period and
(b) the additional Gross NPAs identified by RBI exceed 15 per cent of the publishedincremental Gross NPAs for the reference period. As part of the Risk Based Supervision(RBS) exercise for FY 2018-19 concluded in November 2019 the RBI has pointed out certainretrospective divergence in the Banks asset classification and provisioning as on March31 2019. In conformity with the above mentioned RBI circular the below table outlinesdivergences in asset classification and provisioning.
|Sr. Particulars No. ||Rs. in million |
|1 Gross NPAs as on March 312019 as reported by the Bank ||78825.59 |
|2 Gross NPAs as on March 312019 as assessed by RBI ||111595.59 |
|3 Divergence in Gross NPAs (2-1) ||32770.00 |
|4 Net NPAs as on March 312019 as reported by the Bank ||44848.49 |
|5 Net NPAs as on March 312019 as assessed by RBI ||67838.49 |
|6 Divergence in Net NPAs (5-4) ||22990.00 |
|7 Provision for NPAs as on March 312019 as reported by the Bank ||33977.10 |
|8 Provision for NPAs as on March 312019 as assessed by RBI ||43757.10 |
|9 Divergence in provisioning (8-7) ||9780.00 |
|10 Reported Net Profit after Tax (PAT) for the year ended March 312019 ||17202.79 |
|11 Adjusted (notional) Net Profit after Tax (PAT) for the year ended March 312019 after taking into account the divergence in provisioning ||10840.31 |
SUBSIDIARY ASSOCIATE AND JOINT VENTURE COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS
As on March 31 2020 the Bank had three wholly-owned subsidiaries YES Securities(India) Limited (YSIL) YES Asset Management (India) Limited (YAMIL) and YES TrusteeLimited (YTL.).
The Bank does not have any material subsidiary associate and joint venture company.
Performance and Financial Position of YSIL YAMIL and YTL is given in ManagementDiscussion & Analysis which forms part of this Annual Report.
The brief details about business of the subsidiaries are as under:
YES Securities (India) Limited (YSIL)
YSIL offers to retail HNI and corporate customers a comprehensive range of productsand services encompassing Wealth Broking Investment Advisory Investment Banking(including a dedicated Sustainable Investment Banking practice) Merchant BankingResearch and Institutional Equities services. YSIL is a SEBI registered Stock Brokerholding membership of National Stock Exchange (NSE) Bombay Stock Exchange (BSE) MultiCommodity Exchange (MCX) & National Commodity & Derivatives Exchange
(NCDEX). YSIL is also a SEBI-registered Category I Merchant Banker Investment Adviserand Research Analyst.
YES Asset Management (India) Limited (YAMIL) and YES Trustee Limited (YTL)
YAMIL and YTL were incorporated as wholly owned subsidiaries on April 21 2017 and May3 2017 respectively to carry on mutual fund business.
YAMIL was granted an approval by Securities and Exchange Board of India("SEBI") on July 3 2018 to act as an Asset Management Company / InvestmentManager to YES Mutual Fund.
YAMIL had launched its First Mutual Fund Scheme YES Liquid Fund in January 2019 &further followed by the launch of YES Ultra Short Term Fund and YES Overnight Fund in FY2020. The average AUM of YAMIL for FY 2019-20 was Rs.748.15 crores.
YTL is acting as a Trustee Company to YES Mutual Fund (YMF). It will providetrusteeship services to all the funds launched by YMF.
The Consolidated Financial Statements of the Bank and its Subsidiaries prepared inaccordance with the requirement of Section 129(3) of the Companies Act 2013 shall be laidbefore the ensuing AGM and it forms part of this Annual Report.
Pursuant to the provisions of Section 129(3) of the Companies Act 2013 a statementcontaining salient features of Financial Statements of subsidiaries in Form AOC-1 formspart of the Annual Report. The Financial Statements of the subsidiaries of the Bank areavailable on the website of the Bank (www.yesbank.in). Financials of the Bank and itssubsidiaries shall also be available for inspection by members or trustees of the holdersof any debentures of the Bank at its Registered office.
INTERNAL FINANCIAL CONTROLS SYSTEMS AND THEIR ADEQUACY
The Bank has implemented adequate procedures and internal controls which providereasonable assurance regarding reliability of financial reporting and preparation offinancial statements. The Bank also ensures that internal controls are operatingeffectively.
MATERIAL CHANGES AND CoMMITMENT AFFECTING FINANCIAL position of THE BANK
Except as disclosed below there are no material changes and commitments affecting thefinancial position of the Bank which has occurred between the end of the financial year ofthe Bank i.e. March 31 2020 and the date of the DirectorsRs. Report i.e. June 25 2020.
uncertainty estimations owing to the global healthcare
During the year the Bank decided to enhance its Provision Coverage Ratio on its NPAloans over and above the RBI loan level provisioning requirements. This accounted foradditional provisions of Rs.154220 million for the period ended December 31 2019.
Subsequently RBI issued guidelines on COVID-19 regulatory package under which theBank granted a moratorium of three months on payment of installments and/or interest asapplicable due between March 12020 and May 312020. For such accounts where themoratorium is granted [except advances at IFSC Banking Unit (IBU)] the assetclassification remains constant during the period (number of days past-due shall excludethe moratorium for asset classification under income recognition and provisioning norms)and as the asset classification as on March 31 2020 was retained based on the overduestatus as on February 29 2020. The RBI further extended the regulatory relief package bythree months through a circular dated May 23 2020. In accordance with regulatory packageguidelines the Bank is offering a three-months moratorium extension on instalmentpayments including principal and interest due between June 1 2020 to August 31 2020.
In line with RBI requirements the Bank holds necessary provisions as at March 31 2020against the assets where the asset classification benefit has been extended on account ofstandstill requirements.
Disclosure under COVID19 Regulatory Package can be referred in the Financial Statement- Notes to Accounts disclosure 18.6.24.
Further the Bank is closely monitoring the potential impact of COVID on its borrowersand is engaging with them for suitable resolutions and relaxations in line with RBIguidelines.
RATINGS OF VARIOUS DEBT INSTRUMENTS
The Credit Rating and change/revision in the Credit Ratings for various debtinstruments issued by the Bank from time to time are provided in the Corporate GovernanceReport forming part of the Annual Report.
LOANS GUARANTEES OR INVESTMENTS IN SECURITIES
Pursuant to Section 186(11) of the Companies Act 2013 loans made guarantees given orsecurities provided or acquisition of securities by a Banking company in the ordinarycourse of its business are exempted from disclosure requirements under Section 134(3) (g)of the Companies Act 2013.
CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
There were no materially significant transactions with related parties includingpromoters directors key managerial personnel subsidiaries or relatives of the Directorsduring the financial year which could lead to a potential conflict with the interestbetween the Bank and these parties. The details of the transactions with related partiesif any were placed before the Audit Committee from time to time. There were no materialindividual transactions with related parties which were not in the ordinary course ofbusiness of the Bank nor were there any transactions with related parties which were noton arms length basis. Accordingly the disclosure in Form AOC-2 is not applicable to theBank for the year under review. Suitable disclosure as required by the AccountingStandards (AS-18) has been made in the notes to the Financial Statements.
Prior omnibus approval for normal banking transactions is also obtained from the AuditCommittee for the related party transactions which are repetitive in nature as well as forthe normal banking transactions which cannot be foreseen and accordingly the requireddisclosures are made to the Committee for their approval.
The policy on materiality of Related Party Transactions and also on dealing withRelated Party Transactions as approved by the Audit Committee and the Board of Directorsis uploaded on the website of the Bank and can be accessed at https://www.yesbank.in/about-us/corporate-governance.
DIRECTORS & KEY MANAGERIAL PERSONNEL
During the year Mr. Ravinder Kumar Khanna and Ms. Shagun Kapur Gogia were appointed asAdditional Directors representing promoters of the Bank w.e.f. April 26 2019 andsubsequently they were appointed as Directors by shareholders at the 15th AGMof the Bank held on June 12 2019.
Further at the 15th AGM of the Bank held on June 12 2019 theshareholders inter-alia approved the following:
1. Appointment of Mr. Uttam Prakash Agarwal Mr. Thai Salas Vijayan Mr. Maheswar Sahuand Mr. Anil Jaggia as Independent Directors.
2. Re-appointment of Mr. Brahm Dutt for the second term as an Independent Director andNon-executive Part-time Chairman of the Bank.
3. Appointment of Mr. Ravneet Singh Gill as Managing Director & CEO and KeyManagerial Personnel of the Bank.
In exercise of powers under Section 36AB of the BR Act 1949 RBI had appointed Mr. R.Gandhi Ex- Deputy Governor RBI as an Additional Director on the Board of the Bank for aperiod of 2 years with effect from May 14 2019 to May 13 2021 or till further orderswhichever is earlier.
Mr. Ajai Kumar Lt. Gen. (Dr.) Mukesh Sabharwal (Retd.) and Mr. Uttam Prakash Agarwaltendered their resignations from the directorship of the Bank w.e.f. June 9 2019 June10 2019 and January 10 2020 respectively.
Supersession of the Board
As already mentioned earlier RBI in exercise of the powers conferred under 36ACA ofthe BR Act in consultation with Central Government superseded the entire Board ofDirectors of the Bank consisting of Mr. Brahm Dutt Mr. Thai Salas Vijayan Mr. AnilJaggia Mr. Maheswar Sahu Dr. Pratima Sheorey Mr. Ravinder Kumar Khanna Ms. ShagunKapur Gogia Mr. Subhash Chander Kalia and Mr. Ravneet Singh Gill for a period of 30 daysand Shri Prashant Kumar was appointed as the administrator of the Bank. Accordinglyabove-named Directors were ceased to be Directors of the Bank w.e.f. close of businesshours on March 05 2020.
Reconstitution of the Board as per YBL Reconstruction Scheme
Pursuant to the YBL Reconstruction Scheme nomination made by State Bank of India andOrder passed by RBI under BR Act the new Board of Directors was reconstituted with effectfrom March 26 2020 comprising of the following persons:
Directors named under the YBL Reconstruction Scheme:
(i) Mr. Prashant Kumar as Chief Executive Officer and Managing Director;
(ii) Mr. Sunil Mehta as Non-Executive Chairman;
(iii) Mr. Mahesh Krishnamurti as Non-Executive Director;
(iv) Mr. Atul Bheda as Non-Executive Director;
State Bank of India nominated Directors:
(v) Mr. Partha Pratim Sengupta;
(vi) Mr. Swaminathan Janakiraman
The RBI appointed Additional Directors:
(vii) Mr. R. Gandhi as Additional Director; and
(viii) Mr. Ananth Narayan Gopalakrishnan as Additional Director.
As per the YBL Reconstruction Scheme the new Board other than the AdditionalDirectors appointed by RBI shall hold office for a period of 1 year starting from March26 2020 till March 25 2021 or until an alternate Board is constituted by the Bankwhichever is later.
Additional Directors appointed by RBI shall hold office for a period of two years witheffect from March 26 2020 or until further order from RBI whichever is earlier.
Key Managerial Personnel
During the year Mr. Anurag Adlakha was appointed as Chief Financial Officer(Rs.CFORs.) and Key Managerial Personnel w.e.f. August 10 2019 and Mr. Raj Ahuja ceasedto be the CFO and Key Managerial Personnel w.e.f. August 10 2019 on his assuming theother role in the Bank.
Mr. Ravneet Singh Gill ceased to be MD & CEO and Key Managerial Personnel of theBank w.e.f. close of business hours on March 5 2020 pursuant to the RBIRs.s press releaseNo. 2019-2020/2025 dated March 5 2020. Mr. Prashant Kumar was appointed as MD & CEOw.e.f. March 26 2020 as per the YBL Reconstruction Scheme. He acted as Administrator ofthe Bank appointed by RBI for the period from March 06 2020 to March 25 2020.
Mr. Shivanand R. Shettigar continued to act as Group Company Secretary and the KeyManagerial Personnel of the Bank.
statement on declaration by independent directors
The Bank had received necessary declarations from each of the erstwhile IndependentDirectors under Section 149(6) and 149(7) of the Companies Act 2013 and Regulation16(1)(b) and Regulation 25(8) of the SEBI Listing Regulations that they meet the criteriaof independence laid down thereunder.
However pursuant to the YBL Reconstruction Scheme through which the new Board wasappointed none of the Directors are designated as Independent Directors. Hence the Bankis not required to obtain declarations under Section 149(6) and 149(7) of the CompaniesAct 2013 and Regulation 16(1)(b) and Regulation 25(8) of the SEBI Listing Regulations.
statement regarding opinion of the board with regard to integrity expertise andexperience (including the proficiency) of the independent directors appointed during theyear
Not Applicable as none of the Directors are designated as Independent Directors.
familiarization programs for independent directors
The programs undertaken for familiarizing the Independent Directors and otherNonExecutive Directors are disclosed in detail in the Corporate Governance Report whichforms part of the Annual Report.
number of meetings of the board and ITS various committees
The details of Board meetings held during the year attendance of Directors at themeetings and constitution of various Committees of the Board are included separately inthe Corporate Governance Report which forms part of the Annual Report.
PERFORMANCE EVALUATION OF THE BOARD
The Bank has laid down criteria for performance evaluation of the Directors includingChairman MD & CEO Board Level Committees and Board as a whole as well as theevaluation process for the same in line with the provisions of the Companies Act 2013Listing Regulations and SEBI Guidance Note on the Board Evaluation dated January 5 2017.
Considering the fact that the erstwhile Board was superseded by RBI from the close ofbusiness hours on March 05 2020 and the new Board was constituted on March 26 2020 theperformance evaluation of the members of the Board the Board Level Committees and Boardas a whole was not carried out for FY 2019-20. Additional information on the BoardEvaluation Process forms part of the Report on Corporate Governance.
POLICY ON APPOINTMENT OF DIRECTORS
The Board of Directors of the Bank had formulated and adopted policy on "BoardDiversity and Fit & Proper Criteria and Succession Planning" for appointment ofDirectors on the Board of the Bank and succession planning. The details of the same havebeen included in the Report on Corporate Governance forming part of this Annual Report.
The Board of Directors of the Bank had formulated and adopted policies for Remunerationof Employees of the Bank Remuneration of Directors including the Chairman of the Bank.The details of the same are made available on the Banks website and can be accessed athttps://www.yesbank.in/about-us/corporate-governance.
(a) The statement containing particulars of employees as required under Section 197(12)of the Companies Act 2013 read with Rule 5(3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 forms part of this report. In terms ofSection 136 of the Companies Act 2013 the same is open for inspection during workinghours at the Registered Office of the Bank. A copy of this statement may be obtained bythe Members by writing to the Company Secretary of the Bank.
(b) The ratio of the remuneration of each Director and employees of the Bank asrequired under the provisions of Section 197(12) of the Companies Act 2013 read with Rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014is attached as Annexure 1 to the Report.
EMPLOYEES STOCK OPTION SCHEME
The Bank has instituted Stock Option Plans to enable its employees to participate inthe Banks future growth and financial success. In terms of compensation and benefit policyof the Bank employees are granted options as part of Annual Performance Review processbased on their performance as well as to ensure their retention and to hire the besttalent for its senior management and key positions. The details of Employee Stock OptionSchemes and related statutory disclosures are provided in Annexure 2 to this report.
The Bank is committed to follow best Corporate Governance practices and adheres to theCorporate Governance requirements set by the Regulators under the applicablelaws/regulations. In line with the foregoing the Bank has adopted a Code of CorporateGovernance which acts as a guide to the Bank and the Board on the best practices in theCorporate Governance.
A separate section on Corporate Governance standards followed by the Bank and therelevant disclosures as stipulated under Listing Regulations Companies Act 2013 andrules made thereunder forms part of the Annual Report.
A Certificate from M/s. Mehta & Mehta Practicing Company Secretaries conformingcompliance by the Bank to the conditions of Corporate Governance as stipulated underListing Regulations is annexed to the Report on Corporate Governance which forms part ofthe Annual Report.
In line with the provisions of Listing Regulations the Companies Act 2013 and theprinciples of good governance the Bank has devised and implemented a vigil mechanism inthe form of Whistle-Blower Policy. The policy devised is also aligned to therecommendations of Protected Disclosure Scheme for Private Sector and Foreign Banksinstituted by RBI. Detailed information on the Vigil Mechanism of the Bank is provided inthe Report on the Corporate Governance which forms part of the Annual Report.
CORPORATE SOCIAL RESPONSIBILITY
In compliance with Section 135 of the Companies Act 2013 read with the Companies(Corporate Social Responsibility Policy) Rules 2014 the Bank has constituted CorporateSocial Responsibility (CSR) Committee and statutory disclosures with respect to the CSRCommittee and Annual Report on CSR Activities forms part of this Report as Annexure 3. TheCSR Policy is available on the website of the Bank and can be accessed athttps://www.yesbank.in/pdf/ybl_corporate_social_responsibility_policy.
auditors & reports of the auditors
A. statutory Auditors
In terms of RBI Circular Nos DBS.Nos.ARS.BC.8/ 08.91.001/2000-2001 dated January 302001 and DBS.ARS.BC.04/08.91.001/2017-2018 dated July 27 2017 Statutory Auditors forPrivate Banks cannot be appointed for more than four years. Accordingly M/s. B S R &Co. LLP Chartered Accountants (Firm Registration No. 101248W/W-100022) shall retire atthe ensuing Annual General Meeting.
The Directors recommend appointment of M/s M P Chitale & Co. Chartered Accountants(ICAI Firm Registration Number 101851W) as the Statutory Auditors of the Bank for a periodof four years from the conclusion of 16th AGM till the conclusion of 20thAGM at the ensuing AGM and their appointment will be subject to approval by RBI on anannual basis under above-mentioned RBI circulars.
Qualification reservation adverse remark or disclaimer given by the Auditors in theirReport
The Report given by the Statutory Auditors on the Financial Statements of the Bank forthe financial year ended on March 31 2020 forms part of this Annual Report. The auditorsof the Bank have qualified their report to the extent and as mentioned in the AuditorsRs.Report. The qualification in auditorsRs. report and DirectorRs.s response to suchqualification are as under:
1. Details of Audit Qualification:
The Bank has breached CET 1 ratio and the tier 1 capital ratio as at March 31 2020.CET 1 ratio stood at 6.3%.and Tier 1 ratio stood at 6.5 % as compared to the minimumrequirements of 7.375% and 8.875% respectively.
The Banks Capital Adequacy Ratio as at March 31 2020 was lower than the minimumregulatory requirement primarily due to lower than envisaged capital raise in FY 201920and higher NPA provision. The Bank had decided on a prudent basis to enhance itsProvision Coverage Ratio on its NPA loans over and above the RBI loan level provisioningrequirements. With the proposed capital infusion in FY 2020-21 internal accretion ofcapital expected recoveries of NPA and with selective disbursement of loans to preserveRWA the Bank expects CET ratio to be comfortably above the minimum regulatoryrequirement.
2. Details of Audit Qualification:
The Bank became aware in September 2018 through communication from stock exchanges ofan anonymous whistle-blower complaint alleging irregularities in the Banks operationspotential conflicts of interests in relation to the former MD and CEO and allegations ofincorrect NPA classification. The Bank conducted an internal enquiry of these allegationswhich resulted in a report that was reviewed by the Board of Directors in November 2018.Based on further inputs and deliberations in December 2018 the Audit Committee of theBank engaged an external firm to independently examine the matter. During the year endedMarch 31 2020 the Bank identified certain further matters which arose from otherindependent investigations initiated by the lead banker of a lenders consortium on thecompanies allegedly favoured by the former MD and CEO. In March 2020 the EnforcementDirectorate has launched an investigation into some aspects of dealings and transactionsby the former MD and CEO basis draft forensic reports from external agencies which furtherpointed out to conflict of interest between the former MD and CEO and certain companiesand arrested him. In view of the fact that these enquiries and investigations are stillongoing we are unable to comment on the consequential impact of the above matter on thesestandalone financial statements.
The Bank conducted an internal enquiry of these allegations which was carried out bymanagement and supervised by the Board of Directors. The enquiry resulted in a report thatwas reviewed by the Board in November 2018. Based on further inputs and deliberations inDecember 2018 the Audit Committee of the Bank engaged an external firm to independentlyexamine the matter. In April 2019 the Bank had received the phase 1 report from theexternal firm and based on further review/ deliberations had directed a phase 2investigation from the said firm. Further during the quarter ended December 31 2019 theBank received forensic reports on certain borrower groups commissioned by other consortiumbankers which gave more information regarding the above mentioned allegations. The Bankat the direction of its Nomination and Remuneration Committee (NRC) obtained anindependent legal opinion with respect to these matters. In February 2020 the Bank hasreceived the final phase 2 report from the said external firm. Meanwhile in March 2020the Enforcement Directorate has launched an investigation into some aspects oftransactions of the founder and former MD & CEO and alleged links with certainborrower groups. The ED is investigating allegations of money laundering fraud and nexusbetween the founder and former MD & CEO and certain loan transactions. The Bank is inthe process of evaluating all of the above reports and concluding if any of the findingshave a material impact on financial statements/ processes and require furtherinvestigation. The Bank has taken this report to the newly constituted Audit Committee andBoard and will progress further action basis the guidance and recommendations.
During the year ended March 31 2020 the Bank had received various whistleblowercomplaints against the Banks management former MD & CEO and certain members of theBoard of Directors prior to being superseded by RBI. The NRC basis investigationsconducted by the management has post its review concluded that they have no materialimpact on financial statements.
In January 2020 the then Chairman of the Audit Committee of the Bank highlightedcertain concerns around corporate governance and other operational matters at the Bank.The then Board decided to get this investigated by an independent external firm. Apreliminary report has been received by the Board. While most of the allegations areunsubstantiated the Board has requested the external firm for detailed recommendationshighlighting areas where corporate governance can be further strengthened. Also nooffence of fraud was reported by the Auditors of the Bank.
B. Secretarial Auditors and Secretarial Audit Report
Pursuant to Section 204 of the Companies Act 2013 the Bank had appointed M/s. Mehta& Mehta Practicing Company Secretaries Mumbai as its Secretarial Auditors to conductthe secretarial audit of the Bank for the FY 2019-20. The Bank provided all assistance andfacilities to the Secretarial Auditors for conducting their audit. The Report ofSecretarial Auditors for the FY 2019-20 is annexed to this report as Annexure 4.
Observations reservations or adverse remarks in the Secretarial Audit Report
The Observations of Secretarial Auditor and the response of directors on the same areas follows:
observation No. A: Delay in sending intimation about investor meets to the Exchanges.
Response: All Investors/Analysts meets in respect of which delay in sending intimationhas been reported were held on Friday late evening and the intimation for the same weresubmitted to the exchanges on the next working day i.e. Monday.
observation No. B : The Reserve Bank of India vide its Order dated April 22 2019imposed a penalty of Rs.1125000 on the Bank under Section 30(1) of the Payment andSettlement Systems Act 2007 for the violations of provisions of RBI circular on DomesticMoney Transfer - Relaxations and Master Direction on Issuance and
Operations of Prepaid Payment Instruments (PPIs) in the arrangement to issue acobranded open loop prepaid card (YBL-Zipcash card) in partnership with Zipcash CardServices Pvt. Ltd. and the same was paid to RBI on May 7 2019.
Response: This program was undertaken as a pilot project for digitizing the receivablesof OLA Cab drivers by issuing prepaid cards which could be used for meeting day-todayoperating expenses. As part of this program 1885 cards were activated out of which1605 cards were used to undertake a TOTAL of 14260 transactions (85% usage at FuelStations and Toll Plazas). This program was launched in September 2017 was put on holdin March2018 and was finally terminated in September 2018.
Observation No. C: The Bank and Compliance Officer has paid a settlement amount ofRs.51.6 Lakh and Rs.14.45 Lakh respectively to SEBI for incomplete disclosure ofinformation under Regulation 30 of Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 with respect to the report onIncome Recognition Asset Classification and Provisioning (IRACP) as issued by the ReserveBank of India for FY 2018.
Response: The Bank and the Compliance Officer had paid a sum of Rs.51.6 Lakh andRs.14.45 Lakh respectively to settle the adjudication proceedings without admitting ordenying the guilt.
Observation No. D: Delay in submission of Quarterly Financial Results for the quarterended December 31 2019.
Response: As per the advance intimation given by the Bank to the Stock Exchanges onFebruary 12 2020 the Bank and its management was deeply engaged with the capital raisingexercise which includes extensive work with its investment bankers legal and accountingadvisors the investors and the independent vendor/legal due diligence commissioned forinvestors. Given the fact that said capital raising process had the BankRs.s fullestattention it was decided to publish its unaudited financial results for the quarter andnine ended on March 14 2020. Accordingly the unaudited financial results for the quarterand nine months ended on December 31 2019 were then published on March 14 2020 and afine of Rs.5000 per day aggregating to Rs.135000/- + 18% GST i.e. 24300/- [TOTALRs.159300/- (Rupees One Lakh Fifty Nine Thousand Three Hundred Only)] was paid to eachof the Stock Exchanges BSE Limited & National Stock Exchange of India Limited.
MAINTENANCE OF COST RECORDS
Being a Banking Company the Bank is not required to maintain cost records as persub-section (1) of Section 148 of the Companies Act 2013.
BUSINESS RESPONSIBILITY REPORT
As stipulated in Listing Regulations the Business Responsibility Report describing theinitiatives undertaken by the Bank from environmental social and governance perspectiveis separately attached as part of the Annual Report.
significant AND material ORDERS PASSED BY REGULATORS
During the year under review apart from the moratorium issued by Reserve Bank of Indiaand the YBL Reconstruction Scheme made effective by the Central Government no othersignificant and material orders were passed by the regulators or courts or tribunalsimpacting the going concern status and BankRs.s operation in future.
awards AND RECOGNITIONS
YES BANK has been awarded Rs.Bank of the Year in IndiaRs. at The Banker Awards2019. The Banker magazine is part of The Financial Times Group UK and this award iswidely regarded as one of the most prestigious awards of the Banking Industry.
YES BANK has been adjudged Winner Cyber Security in The BankerRs.s TechProjects Awards 2019 for successfully introducing and implementing robust securityprocedures in corporate internet banking.
YES BANK has been recognized with the Best Bond Adviser (India) and Best GreenBond (India) awards at the Asset Triple A Country Awards 2019. The Bank has won based onthe number size and type of deals industry spread impact on capital market quality ofexecution and secondary market performance.
YES BANK ranked Third among Rs.Top Sell-Side FirmsRs. in Secondary Market INRCorporate Bonds Third among the Rs.Top Arrangers - InvestorsRs. ChoiceRs. for PrimaryIssuances INR Corporate Bonds Third among Rs.Top Investment HousesRs. and Fourth amongthe Rs.Top Arrangers - InvestorsRs. ChoiceRs. for Primary Issuances INR Government bondsin the Annual Local Currency Bond Investor Survey conducted by The Asset Magazine HongKong.
YES BANK recognised with the Best Trade Finance Bank in India Awards (5thyear in a row) at The Asian Banker Transaction Awards 2019.
YES BANK won Qimpro Award for Best Improvement Project in Services and BestQuality Fable in Services Category in 2019
YES BANK recognised as the Best Corporate Trade Finance Deal in India and BestFinancial Supply Chain Management in India at The Asian Banker Bankers Choice Awards 2019
YES BANK recognised with Best Deal South Asia (India) - Transport Deal of theYear Utility Dealof the Year and Renewable Energy Deal of the Year - Solar (HighlyCommended) at The AssetTriple A Asia Infrastructure Awards 2019
YES BANK has been Ranked No. 1 for exemplary performance in Digital Paymentsacross public private foreign and payment banks in India by Ministry of Electronics& Information Technology(MeitY)
YES BANK has been selected by Global Finance magazine as The Innovators in TradeFinance and the 25 Best Financial Innovation Labs (YES FINTECH)
YES BANK recognised with the Best Bank in India for SMEs at Asiamoney CountryAwards Hong Kong 2019
YES BANK recognised with India Domestic Cash Management ProjectFinance &Trade Finance Bank of the Year 2019 at the ABF Wholesale Banking Awards 2019
YES BANK recognised with SME Bank of the Year - India at ABF Retail BankingAwards 2019
YES BANK won the CSR Journal Excellence Award for the Best Project in the Healthand Sanitation
YES BANK won the Platinum Award at the Apex India Excellence Award 2019 for itsSay YES to Safe and Clean Drinking Water project
YES BANK won Silver and Bronze at the 8th ACEF Asian Leaders Awards forExcellence in CSR
CDP has upgraded YES BANKs rating from C (Awareness Band) to A- (LeadershipBand). YES BANKs rating surpasses the averages for the Financial Services and the AsiaRegion which stand at C YES BANK is also rated A- (Leadership Band) in the 2019 SupplierEngagement Rating by CDP.
YES BANK was Approved as "Accredited Entity" by the Green Climate Fund(GCF) - one amongst only 11 private banks globally
YES BANK was included as a constituent of the FTSE4Good Emerging Index by FTSERussell. YES BANK is the only Indian Bank to be included in the index for threeconsecutive years (2017 2018 and 2019)
DISCLOSURES UNDER GREEN INFRA BONDS
Green Bonds have emerged as a mainstream financing mechanism for providing finance toclean energy and are playing a pivotal role in realization of Indias renewable energypotential. Since the maiden issuance by YES BANK the Green Bonds market has witnessed asteady growth and is currently pegged at over USD 10 billion. Driven by the commitment ofmobilizing USD 5 billion towards climate action by 2020 as taken during Paris Accord YESBANK has issued three green bonds:
February 2015: YES BANK issued India first-ever Green Infrastructure Bondsraising an amount of Rs.1000 crore. This 10 year tenor bond witnessed strong demand fromleading investors including Insurance companies Pension & Provident Funds ForeignPortfolio Investors New Pension Schemes and Mutual Funds.
August 2015: YES BANK raised Rs.315 crore through the issue of GreenInfrastructure Bonds to International Finance Corporation on a private placement basiswhich is the first investment by IFC in an Emerging Markets Green Bond issue in the world.The bonds are for a tenor of 10 years. IFC paid for the placement using the proceeds fromthe first Green Masala Bond program that aimed at raising capital in the offshore rupeemarket.
December 2016: YES BANK raised Rs.330 crore through an issue of a 7-year GreenInfrastructure Bonds to FMO the Dutch Development Bank on a private placement basis.This was FMOs 1st investment in a Green Bond issued by a bank in India. FMO hadpaid for the placement using the proceeds from their sustainability bonds issued in 2015.
The amount raised was used to finance Green Infrastructure Projects as per EligibleProjects outlined in the Banks internal guidelines that are in adherence to the Green BondPrinciples (GBP). For FY 2019-20 KPMG India has provided limited assurance on conformityof the use of proceeds process for evaluation and selection of projects management ofproceeds and reporting of these green bonds to GBP 2018.
The GBP are voluntary guidelines developed by the International Capital MarketsAssociation for broad use by the market that recommend transparency and disclosure andpromote integrity in the development of the Green Bond market. They have the followingfour key components and the bank showcases its adoption below:
Use of Proceeds: The proceeds raised by the Bank are used in eligible projectcategories and include all projects funded in whole or in part in the fields ofrenewable and clean energy projects including Wind Solar Biomass Hydropower and othersuch projects.
Process for Evaluation and Selection of Eligible Projects: The Banks processstarts with interactions with potential borrowers to understand the overall aspects of theproject and a preliminary confirmation against the eligibility criteria. The evaluationmoves to risk assessment for confirmation of the eligibility post which furtherdocumentation is sought as per the Banks policies and GBP.
Management of Proceeds: Green Bond allocations to eligible projects are trackedby the Bank through an MIS based asset tagging system. The unallocated proceeds if anyare placed in liquid instruments.
Reporting: The Banks communication to investors through an annual updateincludes:
- List of projects to which proceeds have been allocated to with brief descriptionincluding amounts disbursed and installed capacity;
- Summary of Environment and Social (E&S) impacts associated with projects if any;and
- Information on investment of unallocated proceeds in liquid instruments. Impacts
Through financing solar and wind power plants these bonds strengthen Indias energysecurity while reducing fossil fuel dependency. These bonds have been crucial in financingclimate change mitigation with avoidance of emissions of CO2 SO2NOx and other air pollutants associated with fossil fuel based energy generation.Estimated CO2 emission reductions are shared along with project details.
List of projects against which green bonds proceeds have been allocated as on 31stMarch 2020 is provided below:
Proceeds Utilization* Against Bond Issuance Size of Rs.1000 Cr (February 2015)
|Sr. Project No Location ||Description ||TOTAL Fund Based Utilization ||Estimated** positive E&S impacts - CO2 Emission Reduction ||Known significant negative E&S |
| || ||Rs. Cr ||(tCO2e / yr) ||Impacts |
|1 Maharashtra ||31.5 MW wind energy project ||107.35 ||46248.10 ||None |
|2 Madhya Pradesh ||12 MW wind energy project ||723.55 ||19693.39 ||None |
|3 Telangana ||42 MW solar energy project ||3.51 ||71589.87 ||None |
|4 Karnataka ||40 MW solar energy project ||165.59 ||79379.62 ||None |
Proceeds utilization* Against Bond Issuance size of Rs.330 Cr (December 2016)
|Sr. Project No Location ||Description ||TOTAL Fund Based Utilization Rs. Cr ||Estimated** positive E&S impacts - CO2 Emission Reduction (tCO2 / yr) ||Known significant negative E&S Impacts |
|1 Gujarat ||30 MW wind energy project ||38.17 ||53111.88 ||None |
|2 Telangana ||50 MW solar energy project ||79.28 ||90990.12 ||None |
|3 Rajasthan ||300 MW solar energy project ||74.45 ||457256.23 ||None |
|4 Rajasthan ||200 MW solar energy project ||138.10 ||308954.69 ||None |
* The temporary unallocated proceeds (Rs.315 Cr bond issued in August 2015) have beeninvested in Government Securities and will be allocated back to eligible projects whenavailable.
** The TOTAL CO2 emission reduction for individual projects have beencalculated based on the methodology outlined in the document Rs.CO2 Baseline Database forthe Indian Power Sector User Guide Version 15.0 dated December 2019Rs. (published by theCentral Electricity Authority of India) along with other relevant factors such as projectPLF/CUF estimates installed project capacity resultant annual unit generation etc.
The assurance statement issued by KPMG India is attached as Annexure 5 to this report.
The disclosures required to be made under Section 134(3)(m) of the Companies Act 2013read with Rule 8(3) of the Companies (Accounts) Rules 2014 on the conservation of energytechnology absorption and Foreign exchange earnings and outgo are given as Annexure 6.
Pursuant to the provisions of Section 134(3)(a) and Section 92(3) of the Companies Act2013 read with Rule 12 of the Companies (Management and Administration) Rules 2014 theAnnual Return of the Bank as on March 31 2020 is uploaded on the website of the Bank andcan be accessed at https://www.yesbank.in/about-us/investors-relation/financial-information/annual-reports.
COMPLIANCE WITH SECRETARIAL STANDARDS
The Board of Directors affirm that the Bank has complied with the applicableSecretarial Standards issued by the Institute of Companies Secretaries of India (SS1 andSS2) respectively relating to Meetings of the Board its Committees and the GeneralMeetings.
PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE
The Bank has Zero tolerance towards any act on the part of any executive which may fallunder the ambit of Sexual Harassment at workplace and is fully committed to uphold andmaintain the dignity of every women executive working in the Bank. The Policy regardingPrevention & Prohibition of Sexual Harassment at Workplace provides for protectionagainst sexual harassment of women at workplace and for prevention and redressal ofcomplaints. Also in its endeavour to spread awareness on the aforementioned policy andensure compliance by all the executives the Bank has implemented a plan of action todisseminate the information and train the executives on the policy under the ambit ofGender Respect and Commitment to Equality (GRACE) program.
The Bank has complied with provisions relating to the constitution of InternalCommittee under the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013 (POSH).
Number of cases filed and their disposal under Section 22 of the POSH are as follows:
|Particulars ||Numbers |
|Number of complaints carried forward from last year ||2 |
|Number of complaints filed during the financial year ||8 |
|Number of complaints disposed of during the financial year ||8 |
|Number of complaints pending as on the end of the financial year ||2 |
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 134(5) of the Companies Act 2013 it ishereby confirmed that:
(a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
(b) the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Bank at the end of the financial year and of theloss of the Bank for that period;
(c) the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Bank and for preventing and detecting fraud and otherirregularities;
(d) the directors had prepared the annual accounts on a going concern basis;
(e) the directors had laid down internal financial controls to be followed by the Bankand that such internal financial controls are adequate and were operating effectively; and
(f) the directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
The Directors take this opportunity to express their deep and sincere gratitude to thecustomers of the Bank for their confidence and patronage as well as to the
Reserve Bank of India Securities and Exchange Board of India Government of IndiaState Bank of India as well as other investor banks who have invested under the YBLReconstruction Scheme and other Regulatory Authorities for their cooperation support andguidance. The Directors would like to express a deep sense of appreciation for thecommitment shown by the employees in supporting the Bank. The Directors would also like tothank all our valued partners vendors and stakeholders who have played a significant rolein continuing to support the Bank.