Yes Bank awaits SMBC entry for top deck recast
He also said SMBC had already applied to the Reserve Bank of India (RBI) to acquire a 20% stake from SBI and other banks that came together to bail out the private lender five years ago, after the regulator had ordered its board to be superseded just before the Covid lockdowns. SMBC has already applied to the antitrust regulator, the Competition Commission of India (CCI), for buying the Yes Bank stake, Kumar said.
"They (SMBC) have already made an application to the CCI," Kumar said. "We expect once these two approvals come, then this transaction would be finalised."The Japanese lender's initial application to the RBI was itself for buying 25% ownership, allowing SMBC to immediately increase stake further once the regulatory approvals are in place, ET reported on July 16.Credit Demand, NIMs
Separately, Kumar said the September quarter would be the most challenging for the banking sector as credit growth remains sluggish and the full impact of the repo rate cut begins to flow through the system, weighing on margins. "Q2 would be the toughest quarter for the entire banking industry, because the 50-bps rate cut would lead to repricing of the entire loan book linked to external benchmarks, though deposits will take some time to reprice," Kumar said. "Quarter three onwards I think it would stabilise, if there is no further rate cut."
Sixty percent of Yes Bank's loan book is linked to external benchmarks, 10% to the marginal cost of funds-based lending rate (MCLR), and the remaining 30% comprises fixed-rate loans. Kumar also expressed concern over weak credit demand in the economy. The bank's advances grew at a modest 5% in the June quarter, while deposits rose by 4%."Demand (credit) is low, corporates are either accessing the debt or the overseas market, they have a good balance sheet, they are sitting with the cash, so reliance on the bank loans have come down on the corporate side," he said.
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