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

Sustainability Zone
“Sustainability Zone” combined economic, environmental, social benefit
Pure Philanthropy
Evolution of Sustainability
Values over Value
Philanthropy focused
New Generation of Sustainability:
Integration and
Mainstreaming
Sustainability:
Triple Bottom Line
Sustainability as part of business
CSR based initiatives
 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 in Thought
RESPONSIBLE BANKING
(CSR & Sustainability)
Thought Leadership, Advisory,
Institutionalization
Responsible Banking in Action
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
Deal Generation
YES SAMPANN
Direct Lending
Microfinance
Institutions
Group (MIG)
Alternative
Energy &
Environment
Social
Enterprises
Clean &
Sustainable
Technologies
South Asia Clean
Energy Fund
(SACEF)
Deal Generation
–
–
–
–
–
Other Bank Divisions:
Corporate Finance
Corp. & Inst. Banking
Emerging Corporates
Business Banking
Retail Branches

• 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
Post Disbursement
Monitoring

Site Visits

Annual Review

Monitoring of agreed upon norms
Final Sanction
Syndication of Loan
Transaction
Origination

Adherence to laid down standards Compliance Check

Compliance to regulatory norms
 Focus on Bank’s Quality Policy

Re-review of Environment and
Social Policy
In-Principle Approval
Project Finance
Transaction Process &
Select Activities

Financial modelling and scenario analysis

Environment Impact Study

Government approvals

Utilities consumption (power, fuel etc)
Detailed Due Diligence
Risk Analysis

Detailed technical due diligence

Environment and
Social Policy review

Potential projects rejection
Legal Analysis
• 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

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
• Active participation in the Global
Roundtables
• 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

 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

 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

 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 Zameen’s Sole Banking Partner

 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

Quality of Assets
 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)
Size of Business
 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