Toughest Finance Job in India Keeps Yes Bank CEO Awake at Night

Prashant Kumar Photographer: Dhiraj Singh/Bloomberg Photographer: Dhiraj Singh/Bloomberg Late in the evening of March 5,

Prashant Kumar

Photographer: Dhiraj Singh/Bloomberg

Late in the evening of March 5, Prashant Kumar took an unexpected call from his boss at State Bank of India. He was offered the job of rescuing the country’s most troubled private-sector bank, and — if he accepted — told to report for work at 8 a.m. the following morning.

“The first thing that came to my mind was where was the address,” he recalled. “I had to Google it.”

Kumar had little hesitation in accepting the position of chief executive officer of Yes Bank Ltd., the lender that was teetering on the edge of insolvency before being bailed out that month at a cost of $1.3 billion. The only concern came from his wife, who Kumar says was “shocked” that he had resigned from his safe post at the government-controlled SBI, where he was chief financial officer.

Another failure of a financial institution would have been “catastrophic,” Kumar said of Yes Bank’s rescue, which came following the collapse of two shadow lenders. The central bank organized a bailout led by SBI after Yes Bank suffered a run on deposits on concern about its massive bad-loan portfolio.

“Confidence of people, customers and even employees was shaken,” Kumar said. “The bank had a large stressed book. It was a very different challenge than handling money at SBI.”

Since starting as CEO, Kumar, 59, has made restoring the faith of Yes Bank’s depositors a priority. The bank suffered an outflow of 1.04 trillion rupees ($13.9 billion) in the six months through March, about half its total deposits.

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Stopping Outflows

Yes Bank deposits have stabilized after rescue in March

Source: Bank filings

Kumar set aside an hour a day during the first two months to call depositors to reassure them personally about the bank’s stability. He spoke to about 10-15 of them daily, stressing that Yes Bank now also had the backing of SBI.

“The biggest challenge when I joined was to stop the outflow of deposits,” Kumar said. “For any bank, having a sustainable deposit base is the most critical ingredient.”

Big Rescue

SBI and seven other Indian lenders took a combined 79% stake in Yes Bank in March. That has helped stabilize the situation, Kumar said, with deposits rising by about 120 billion rupees to 1.17 trillion rupees by the end of June. Kumar said he aims to raise deposits to 2 trillion rupees by March 2021.

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