Private lender Yes Bank on Monday said in a statement it has raised $150 million long-term loan from International Finance Corporation (IFC) for a tenor of up to seven years. According to the statement, Yes Bank will use the loan to scale up its small and medium enterprise (SME) portfolio.
The financing package to YES Bank includes $45 million provided through IFC?s new co-lending programme in addition to IFC?s own account loan of $60 million, both for a period of seven years. Another $45 million syndicated loan provided by Intesa Sanpaolo, Bank Muscat, Doha Bank and AKA Frankfurt for a tenor of two years. In November, IFC had announced on its website it will provide support to Yes bank in providing access to finance of $125 million to improve the lender?s asset-liability mismatch for ramping up Yes Bank?s SME portfolio.
IFC had noted that Yes Bank ?runs an ALM mismatch in the short-term buckets with its short-term liabilities exceeding short-term assets, especially in the shorter-end maturities?. The bank needs to increase long-term funding to take care of this mismatch, the finance company said
Arun Agarwal, group president and head of international banking at Yes Bank, said IFC was able to source additional funding of $25 million from their partner banks. Agarwal added it had swapped the IFC?s loan with Reserve Bank of India (RBI) through the concessional swap window offered to banks. The RBI had allowed banks to borrow up to 100% of their tier-I capital from overseas banks and institutions, which can be swapped with the central bank at a concessional rate of 100 basis points (bps) below the rate prevailing in the market. IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector in developing countries.