Scaling up clean lighting programs with Responsible

Banking Solutions

The only „Greenfield‟ private sector Bank to be set up in the last 15 years

Owner – Manager - PartnerProfessional management team with the highest ownership levels among all banks

Knowledge Banking - Key Differentiator for the Integrated product offering with „One-Bank‟ customer proposition

Unique Approach to Technology Outsourced model enhancing scalability; cutting edge features driving Retail

Consistent Financial Performance FY2009 PAT: INR 3038 million; ROA: 1.52%; ROE : 20.7%

Receive the No. 1 Emerging Markets Sustainable Bank of the Year award at the FT/IFC Sustainable Banking Awards

Received the Most Innovative Bank in India award at The New Economy Annual Banking & Finance Awards in London

Launched YES COMMUNITY, a Responsible Banking initiative across Retail branches nationally

YES BANK Summary Update

Responsible Banking @ YES BANK

Business does not operate in a vacuum

Integrating social and environmental aspects into core business strategy important for long-term growth of the Bank

Responsible Banking means adopting a People-Planet-Profit approach to doing business

Translates into a critical competitive edge for the Bank

Offers inroads to new business segments and client base

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, informationtechnology, biotechnology etc

Using knowledge driven approach and specialised skill sets, human resources to adaptcommercial financial services to sustainability space.

YES BANK has “leapfrogged” traditional philanthropy-based CSR to Responsible Banking finding Business Solutions to Social & Environmental Issues

“Sustainability Zone” combined economic, environmental, social benefit

Pure Philanthropy

Pu

re P

rofit

Sustainability Zone Evolution of Sustainability

Values over Value

Sustainability:

Triple Bottom

Line

New Generation

of Sustainability:

Integration and

Mainstreaming

Philanthropy focused

CSR based initiatives

Sustainability as part of business

Responsible Banking – A Differentiated Approach

Responsible Banking Framework

Responsible Banking in Action

Microfinance Institutions

Group (MIG)

YES SAMPANN

Direct Lending

Responsible Banking in Thought

YES COMMUNITY

Responsible Corporate

Citizenship (RCC)

Other Bank Divisions:

– Corporate Finance

– Corporate & Institutional Banking

– Commercial Banking

– Business Banking– Retail Branches

Alternative Energy &

Environment

SUSTAINABLE INVESTMENT BANK (SIB)Business Planning/Structuring,

M&A Advisory, Private Placement

Clean & Sustainable

Technologies

Deal Generation

Internal Engagemen

t

Deal Generation

South Asia Clean Energy

Fund

MICROFINANCE Credit + Services

RESPONSIBLE BANKING (CSR & Sustainability)

Thought Leadership, Advisory, Institutionalization

SOCIALLY RESPONSIBLE

INVESTING Growth Capital

AGRIBUSINESS, RURAL & SOCIAL BANKING (ASRB)

Credit + Services

TatvaInvestment Program

Social Enterprises

FINANCIAL INCLUSION BANKING

Credit, Savings, Remittances

BusinessCorrespondent

Deal Generation

Responsible Banking: Mainstreaming sustainability principles across YES BANK

SELECT RESPONSIBLE BANKING INITIATIVES

A “Think Tank” incubating new business opportunities to mainstream sustainability

Provides thought leadership

Establishes partnerships for development - local and international

Supports the socially responsible investor community by innovating

business approaches to development.

Provides Responsible Corporate Citizenship advisory services to businesses, governments and non-profits for

Social Auditing

Strategizing CSR practices

Socio-environmental engagement

Waste management

Human capital and employee support analysis

Carbon emissions analysis

Social enterprise planning and scalability

Entrepreneurship development and syndication of funds

Responsible Banking „in Thought‟

Agribusiness, Rural & Social Banking

Innovative financial models

Leveraging outreach of stakeholder in Agri Value Chain to overcome „last mile‟ issues

Customized insurance solutions

Select Partners:

Reaching over 1 million Farmers through these Partnerships

Zameen Organic Pvt. Ltd 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

Financing Innovative AgribusinessDeal Example

YES BANK is Zameen‟s Sole Banking Partner

Programme Approach About the Programme

Microfinance Institutions Group (MIG)

Wholesale – Credit partnership with leading Indian MFIs across the country

MIG's product suite includes term loans, loan syndications and rated capital market loan products

Mainstreams microfinance by providing access to capital markets that reduce the cost of funds and operations resulting in affordable financial products for the BOP

YES SAMPANN

Direct Intervention –Lending directly to BOP clients in urban and rural locations

Servicing bottom of the pyramid through a gamut of financial products and services

Fills gap of institutionally sponsored financial services provider servicing needs of low income communities in rural and urban India

MicrofinanceComplementary Two Pronged Approach

Growing Partnerships and Programs to Financially Include 1000‟s

Institutes specific transactions to position microfinance as a new assetclass, appealing to a broad base of investors and lenders, expanding access tocapital

FIRST Indian bank to undertake innovations in capital market products formicrofinance:

• 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 inthe form of Commercial Paper & Non-Convertible Debentures of INR2000 mn (USD 40 mn)

Enabled cost reduction for the MFI to the extent of 300 bps

• Structured Products

Securitisation of receivables originated by MFI

MFI receivables recognised as an „asset class‟

Generated interest among institutional investorsPotential incremental access to capital for industry of USD 12-14bn

annually, impacting 60-70mn clients

Microfinance Institutions GroupMultiplier Effect: The Indirect Impact

Sameer started a Ceramic & Glassware business 5 yrs ago in Chembur.

Presently in his 2nd Loan Cycle1st Loan: Rs 25,000 for 5 months2nd Loan: Rs 37,000 for 8 months

Repayment: Weekly (1st loan) / Fortnightly (2nd

loan)

Has used the Loan for Sourcing additional stock from Firozabad & increasing inventory. Earlier, faced problems of stock shortage due to lack of capital

Monthly Household Surplus: Rs 13,318

Wants to expand his business on the wholesale side and stock other ceramic material apart from mugs, glasses & cups

I hope to grow my business with YES SAMPANN‟s support – it feels like home, I don‟t have to anywhere else to fulfill my financial needs

Sameer Khan, 28 yrsMarried, has 3 yr. old son

A YES SAMPANNite

Supporting EntrepreneursOne person at a time

M&A Advisory

JV Advisory

Business Restructuring

Private Equity Raising

Sustainable Investment Banking (SIB)

M&A Advisory

Business Restructuring

Private Equity Raising

56% of the 700 million rural Indian residents lackaccess to electric power; Government wants todeliver electricity to all of them by 2012 – 50% of itfrom renewable resources (wind, power, solar &biogas)*

YBL focused on addressing India‟s energydeficiency & reducing reliance on fossil fuelsthrough thrust on renewable energy

Raised USD 47 mn for Greenko, a renewableenergy player, through private placement ofequity shares with Global Environment Fund, oneof the world‟s largest environment focusedfunds, for expansion of their hydro powergeneration assets

*Source: Pernick, R. & Wilder, C (2007) ‘The Clean Tech Revolution’, Harper Collins

Renewable EnergyDeal Example

• Promoting funds

• Buy-Side advisory services to global “Financial Sponsors”

• Tailor made investment advise based on sector focus, investment size of the fund, having India in the geographic focus

• Focused on building proprietary deal pipeline for the fund

• Current Mandate - Exclusive India Advisor for U.S.-based GEF‟s Emerging Markets fund for clean energy and environment investments in India.

Socially Responsible Investing

Key Highlights – South Asia Clean Energy Fund (SACEF)

Commitment period – 5 years

GEF and YBLFund Sponsor

Remaining life – 5 years with two 1 year extension periods

Fund Life

USD 2.0 millionMinimum Investor Commitment

10% in a single portfolio companyInvestment Cap

USD 3.0 - 15 millionSize of Investment

USD 200 millionSize of Fund

Developing semi-commercial models to scale up the LaBL

program

A TERI and YES BANK Partnership

TERI-YES BANK LaBL Financing Program

Objectives of the program:

• Research and survey exisiting LaBL sites to uncover best practices, lapses, socio economic conditions, availability of lighting fuel etc.

• Develop 2-3 semi-commercial models for the LaBL campaign

• Pilot the commercial models through grant funding to assess viability over a 2-3 month period

• Finalize the models and co-fund scale up with other commercial banks and financial institutions

TERI-YES BANK LaBL Financing Program

Key Findings –

– Entrepreneurs with other lucrative business interests are not fully committed to making model successful in their village

– Entrepreneur‟s reputation and standing in the village determines the SLCS models success

– Villagers typically spend INR 100-150 per month on lighting

– Entrepreneurs are charging INR 3.5 on average for renting the lanterns for 1 night

– 90% of respondents still rely on kerosene lanterns for their alternative lighting needs

– Electricity theft is high in those villages where state allocates electricity for agricultural needs

– Mobile phone usage in rural India is extremely high. This unlocks the possibility of entrepreneur earning

Financing options currently being explored:

• Microfinance loan to SLCS entrepreneurs/SHG –– Backed by FD from TERI and/or LaBL Partner– Disbursement and relationship on ground to be managed by partner MFI– Payback period typically 12-18 months

• School financing model– Lending to schools with an entrepreneurial bent of mind– Model enables school children to take home a lantern after school – Rent for lantern is added onto school fees

• Community financing– Entrepreneur collects refundable deposits from community– Community deposits parked at MFI– Bank lends to entrepreneur against community deposit

TERI-YES BANK LaBL Financing Program

TERI-YES BANK LaBL Financing Program

Benefits of commercialization of clean lighting models:

• Gradual shift away from grant and subsidy model for greater scalability

• Creates accountability amongst stakeholders – entrepreneur, user,

• Generate a profit and loss/balance sheet track record for models and attract PE and Institutional investment in the future

• Create interest from commercial banking and finance community in investing in small and large scale clean lighting ventures

Successfully Positioned

Emerging Markets Sustainable Bank of the Year for Asia2008 for excellence in creating environmental, social andfinancial value across its operations.

Best Corporate Social Responsibility Practice Award, Socialand Corporate Governance Awards, 2007, in recognition ofinnovative strategies to implement CSR practices within thebusiness focus of the Indian Corporate sector.

Trade Finance „Deal of The Year‟, 2007 in recognition ofinnovative structured rural financing solutions.

Environment Leadership Award, in recognition ofoutstanding contributions made through working inpartnerships to improve the environment and quality of lifefor the people of Asia.

The first bank to be recognized by the CII-ITC SustainabilityAwards in 2009

THANK YOU