'Kingfisher chairman will sort things out': Yes Bank CEO

Yes Bank is one of the banks with a small exposure to troubled Kingfisher Airlines. Rana Kapoor, founder managing director and CEO, spoke to journalists on the sidelines of the World Economic Forum (WEF) India Summit about the idea of banks bailing out the airline, as well as other concerns plaguing the banking sector.

Here are edited excerpts:

What is your exposure to Kingfisher Airlines? Do you think banks should bail out the company?

Rana Kapoor: We do not have any significant exposure to Kingfisher. But we must understand that airlines is not an easy business. It (the problems) is not to do with an individual company but the sector as a whole. The government will look into the fuel rates and costs of the sector, as airlines are a public utility. The Kingfisher chairman is committed to the company’s cause. I am sure he will sort it out.

[caption id=“attachment_130260” align=“alignleft” width=“380” caption=“Rana Kapoor, Yes Bank founder managing director and CEO. Don Emmert/AFP”] [/caption]

What is your exposure to the power sector and what are the concerns?

RK: Our exposure to the power sector is minimal. But I can say it (the current troubles affecting the sector) is a temporary glitch. The Indian power sector is strong and must be growing for the growth of the economy. These issues must be taken care of and I am sure it will be sorted. As a bank, we do not have much risky exposure to the sector. Overall, in the industry also, Yes Bank has one of the lowest gross NPA (non-performing asset) levels.

You were among the first banks to deregulate interest rates for savings deposits. How is the response from customers so far?

RK: The response is great as the era of lazy banking has gone. Now is the time for active banking. India’s banking regulators took a huge step by deregulating the savings rate. There is so much scope for new products to be introduced. But how much it will affect our current accounts and savings accounts is difficult to comment at this time. That will only play out over a longer period of time.

What kind of growth do you expect for your bank’s retail banking operations?

RK: We are launching retail products every quarter and are very confident of growth. By 2015, retail operations will be our second-largest segment. By 2020, it will become the largest part of our portfolio.

At the WEF’s panel discussion on financial innovation in the banking space, Kapoor also noted that innovation in bank must be encouraged but regulated. Otherwise, things could blow out of proportion, just as they did during the economic crisis of 2008.

“Let us go back to the first line of first chapter of banking regulations. We are public trust institutions. Being public trust institutions, we cannot gamble and must deliver the social cause as well,” he said.