RESPONSIBLE BANKING

Business Solutions for Sustainable Development

Rita Soni Country Head Responsible Banking YES BANK Ltd FINANCING A SUSTAINABLE LOW CARBON INDIAN ECONOMY An IBA, WWF-India, TCG Initiative 13 May 2010

YES BANKs Sustainability Vision

Sustainability Zone Evolution of Sustainability New Generation of Sustainability: Integration and Mainstreaming Sustainability: Triple Bottom Line
CSR based initiatives Sustainability as part of business

Pure Profit

Sustainability Zone combined economic, environmental, social benefit

Values over Value

Pure Philanthropy
Philanthropy focused

Mainstreaming sustainability using multi-stakeholder approach Operate in Sustainability Zone supporting businesses that meet economic, environmental & social objectives Innovative financial solutions to address gamut of development issues sustainable livelihood, food security, climate change, public health, education, information technology, biotechnology etc Using knowledge driven approach and specialised skill sets, human resources to adapt commercial financial services to sustainability space.
YES BANK has leapfrogged traditional philanthropy-based CSR to Responsible Banking finding Business Solutions to Social & Environmental Issues

Responsible Banking Framework

Responsible Banking in Thought Responsible Banking in Action

RESPONSIBLE BANKING (CSR & Sustainability)

Thought Leadership, Advisory, Institutionalization

AGRI, RURAL & SOCIAL BANKING (ARSB)

Credit + Services

MICROFINANCE
Credit + Services

SUSTAINABLE INVESTMENT BANK (SIB)

Business Planning/Structuring, M&A Advisory, Private Placement

PRIVATE EQUITY
Growth Capital

Responsible Corporate Citizenship (RCC)

Internal Engagement

YES COMMUNITY

YES SAMPANN Direct Lending

Microfinance Institutions Group (MIG)

Alternative Energy & Environment

Social Enterprises

Clean & Sustainable Technologies

South Asia Clean Energy Fund (SACEF)

Deal Generation

Deal Generation

Other Bank Divisions: Corporate Finance Corp. & Inst. Banking Emerging Corporates Business Banking Retail Branches

Environment and Social Policy (ESP)

ESP addresses social & environmental considerations and includes an exhaustive list of prohibitive activities as well such as production or trade in weapons Embedded in Bank-wide Credit Risk Policy Benchmarked against key sustainability financing principles of multilateral & bilateral agencies such as the World Bank group, the Asian Development Bank and the Equator Principles
Project Finance Transaction Process @ YES BANK
Transaction Origination Post Disbursement Monitoring
Site Visits Annual Review Monitoring of agreed upon norms

In-Principle Approval
Financial modelling and scenario analysis Environment Impact Study Government approvals Utilities consumption (power, fuel etc)

Appraisal of project finance transactions ensures adherence to Credit Risk Policy, along with economic viability Enables the Bank to recognize, evaluate, and monitor, the environmental and social facets clients

Final Sanction Syndication of Loan

Project Finance Transaction Process & Select Activities

Detailed Due Diligence

Detailed technical due diligence Environment and Social Policy review Potential projects rejection

Risk Analysis
Adherence to laid down standards Compliance Compliance to regulatory norms Focus on Banks Quality Policy Re-review of Environment and Social Policy

Check

Legal Analysis

Indicative of the walk the talk link between the Banks sustainability vision and its policy & processes to substantiate this

Thought Leadership
CLINTON GLOBAL INITIATIVE
Corporate commitments
Education: Akanksha volunteer program Corporate Payroll Giving: GiveIndia program Microfinance Social Entrepreneurship: S3IDF Health: Malnutrition Matters and STFCL

UN GLOBAL COMPACT
Only Indian Bank to be an active Signatory

First Indian Bank to become a Signatory Emission disclosed for the year 2007-08 and 2008-09 First Indian Bank to become a Signatory Active participation in the Global Roundtables India Partners along with CII and WWF-India to encourage other companies for reporting

SELECT RESPONSIBLE BANKING INITIATIVES

Malnutrition Matters (MM)

YES BANK as Technology Transfer Agent

MMs VitaGoat employs bicycle-powered grinders and variety of locally available fuels to prepare protein-rich soy products like soy yogurt, tofu, and milk as a lower cost, nutritious alternative to milk Results:

VitaGoat deployed at Buldana Urban Co-operative Credit Society run residential school since 2007
700 school children fed daily with soy milk/paneer

Vigyan Ashram, MM & YBL to develop ultra low-cost soymilk system for microentrepreneurs, enabling greater outreach Expansion to Rajasthan with the delivery of first VitaGoat to Seva Mandir in Jan 2010 Expected to serve ~300-400 people per day

Seva Mandir employee using VitaGoat to grind Soybeans

Microfinance Institutions Group (MIG)

Multiplier Effect: The Indirect Impact
Institutes specific transactions to position microfinance as a new asset class, appealing to a broad base of investors and lenders, expanding access to capital FIRST Indian bank to undertake innovations in capital market products for microfinance:

o Capital Market Products

Banks have been main source of debt funding for MFIs (term loans) Term loans are relatively expensive they are illiquid YES BANK arranged first rated bond issuance of an MFI in the world in the form of Commercial Paper & Non-Convertible Debentures of INR 2000 mn (USD 40 mn) Enabled cost reduction for the MFI to the extent of 300 bps o Structured Products Securitisation of receivables originated by MFI

MFI receivables recognised as an asset class

Generated interest among institutional investors Potential incremental access to capital for industry of USD 12-14bn annually, impacting 60-70mn clients

Zameen Organic

Overcoming the last mile

Fair trade supported company owned by Small Farmers Organizations Network of 6,000 small farmers producing organic cotton in the Vidharbha (Maharashtra) and Adilabad (Andhra Pradesh) regions Provides vital processing and marketing linkage between organic farmers and branding companies Unique concept of Premium: Farmer Premium and Community Premium

YES BANK is Zameens Sole Banking Partner

Sustainable Investment Bank

Promotes investments, provides

Advisory to SME, Social & Environment Sectors

advisory services & facilitates growth capital for social & environment focused enterprises Asmitha Microfinance Ltd raised USD 10mn for one of top five Indian MFI serving ~1.16 mn clients, through private placement of equity Gradatim IT Ventures - raised USD 3mn growth capital enabling MFI access to technological interventions that increase operational efficiencies and reduce costs

Responsible Banking
Business Results
Quality of Assets Size of Business

ONLY private sector bank to

consistently exceed RBIs PSL targets (in terms of agriculture specific and overall targets) over the last three years
(Source: RB Portfolio comparison using RBI data)

Tracks at 43% of loans & advances; growth

of 34% of interest income terms from FY08

Growth in both absolute & percentage

With MIG portfolio of USD 100mn

Consistently maintained ZERO non-

performing assets (NPAs) in RB portfolio which is generally 12-13% at other banks (Source: RBI data)

reaching 1.4mn individuals, microfinance constitutes 11.07% of RB portfolio highest among Indian commercial banks; next highest, ING at 7.55% (Source: Bank analysis of
MF Sector, using data from ACCESS Development Services & RBI)

Despite Banks limited rural presence,

ARSB reached 1.3mn farmers; 25% growth year on year with portfolio of USD 547mn.
costs, institutionalizing revenue stream where none existed

SIB generated fee income of 2.5x cover on

Thank You!