BackYes Bank raises $150 mn to lend to small companies
Money will be lent to small companies in India with annual turnover of between `20 crore and `100 crore
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Mumbai: Yes Bank Ltd has raised $150 million from the International Finance Corporation (IFC), the World Bank’s development finance arm, and a clutch of commercial banks, mainly to lend to small companies in India.
IFC advanced a $60 million, seven-year loan on its own and was the lead arranger for a $45 million loan, also of a seven-year tenure, in association with other global development institutions like the Manila-based Asian Development Bank and Frankfurt-based KfW.
The loans were raised in foreign currency to take advantage of the Reserve Bank of India (RBI) window that allows banks to swap foreign currency loans for rupees at a 1% discount to the market rate, said Jaideep Iyer, group president and deputy chief financial officer (CFO) at Yes Bank.
“After using the RBI window the loan is priced almost on par with rupee funds. We had to borrow from multinational development finance institutions because foreign commercial banks are averse to lending long-term funds," Iyer said in a phone interview.
Yes Bank raised another $45 million loan with a shorter two-year tenure through Italy-based Intesa Sanpaolo, Bank Muscat, Doha Bank and AKA Frankfurt.
“Increasing financial access to micro, small and medium enterprises directly supports job creation, a top priority for IFC in India," said Serge Devieux, IFC director for South Asia.
Iyer said the money will be lent to small companies in India with annual turnover of between ₹ 20 crore and ₹ 100 crore.
“Our experience in lending to small companies has been good and we are very comfortable lending to them. Small companies, along with retail, make up 18% of our loan book, which we expect to increase to 30-40% in the next two to three years," Iyer said.
In a separate statement, IFC said the loan will “expand access to finance for women-owned small businesses and create jobs in India".
“In South Asia, this is IFC’s first credit line with a gender component that will help Yes Bank increase its lending to small businesses in India’s low income states, including in the north-east region," the statement said.
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