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Transcript of RESPONSIBLE BANKING Business Solutions for Sustainable Development Rita Soni Country Head...
RESPONSIBLE BANKING
Business Solutions for Sustainable Development
Rita SoniCountry Head
Responsible BankingYES BANK Ltd
FINANCING A SUSTAINABLE LOW CARBON INDIAN ECONOMYAn IBA, WWF-India, TCG Initiative
13 May 2010
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’s Sustainability Vision
YES BANK has “leapfrogged” traditional philanthropy-based CSR to Responsible Banking finding Business Solutions to Social & Environmental Issues
“Sustainability Zone” combined economic, environmental, social benefit
Pure Philanthropy
Pu
re P
rofi
t
Sustainability Zone Evolution of Sustainability
Values over Value
Sustainability: Triple Bottom Line
New Generation of Sustainability: Integration and Mainstreaming
Philanthropy focused
CSR based initiatives
Sustainability as part of business
Responsible Banking in Action
Microfinance Institutions
Group (MIG)
YES SAMPANN Direct Lending
Responsible Banking in Thought
YES COMMUNITY
Responsible Corporate
Citizenship (RCC)
Other Bank Divisions:– Corporate Finance– Corp. & Inst. Banking – Emerging Corporates– Business Banking– Retail Branches
Alternative Energy &
Environment
SocialEnterprises
SUSTAINABLE INVESTMENT BANK (SIB)Business Planning/Structuring, M&A
Advisory, Private Placement
Clean & Sustainable
Technologies
Deal Generation
Internal Engagement
Deal Generation
South Asia Clean Energy Fund
(SACEF)
MICROFINANCE Credit + Services
AGRI, RURAL & SOCIAL
BANKING (ARSB)Credit + Services
RESPONSIBLE BANKING (CSR & Sustainability)
Thought Leadership, Advisory, Institutionalization
PRIVATE EQUITY
Growth Capital
Responsible Banking Framework
• 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 • 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
• Indicative of the “walk the talk” link between the Bank’s sustainability vision and its policy & processes to substantiate this
Environment and Social Policy (ESP)
In-Principle Approval
Site Visits Annual Review Monitoring of
agreed upon norms
Project Finance Transaction Process @ YES BANK
Project Finance Transaction Process &
Select Activities
Post Disbursement Monitoring
Transaction Origination
Detailed Due Diligence
Risk Analysis
Legal Analysis Compliance Check
Syndication of Loan
Final Sanction
Financial modelling and scenario analysis
Environment Impact Study Government approvals Utilities consumption (power,
fuel etc)
Detailed technical due diligence
Environment and Social Policy review
Potential projects rejection
Adherence to laid down standards
Compliance to regulatory norms Focus on Bank’s Quality Policy Re-review of Environment and
Social Policy
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
• First Indian Bank to become a Signatory
• Emission disclosed for the year 2007-08 and 2008-09
• India Partners along with CII and WWF-India to encourage other companies for reporting
UN GLOBAL COMPACT
Only Indian Bank to be an active Signatory
• First Indian Bank to become a Signatory
• Active participation in the Global Roundtables
SELECT RESPONSIBLE BANKING INITIATIVES
Malnutrition Matters (MM)YES BANK as Technology Transfer Agent MM’s 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 bpso 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 OrganicOvercoming the ‘last mile’
YES BANK is Zameen’s Sole Banking PartnerYES BANK is Zameen’s Sole Banking Partner
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
Sustainable Investment BankAdvisory to SME, Social & Environment Sectors Promotes investments, provides 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 BankingBusiness Results
ONLY private sector bank to consistently exceed RBI’s PSL targets (in terms of agriculture specific and overall targets) over the last three years (Source: RB Portfolio comparison using RBI data)
Consistently maintained ZERO non-performing assets (NPAs) in RB portfolio which is generally 12-13% at other banks (Source: RBI data)
Tracks at 43% of loans & advances; growth of 34% of interest income
Growth in both absolute & percentage terms from FY08
With MIG portfolio of USD 100mn 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 Bank’s limited rural presence, ARSB reached 1.3mn farmers; 25% growth year on year with portfolio of USD 547mn.
SIB generated fee income of 2.5x cover on costs, institutionalizing revenue stream where none existed
Quality of Assets Size of Business
Thank You!