YES BANK

Scaling up clean lighting programs with Responsible

Banking Solutions

YES BANK Summary Update

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 TechnologyOutsourced model enhancing scalability; cutting edge features driving Retail

Consistent Financial PerformanceFY2009 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

Responsible Banking @ YES BANKBusiness does not operate in a vacuumIntegrating social and environmental aspects into core business strategy important for long-term growth of the BankResponsible Banking means adopting a People-Planet- Profit approach to doing businessTranslates into a critical competitive edge for the BankOffers inroads to new business segments and client base

Responsible Banking – A DifferentiatedApproach

Sustainability Zone

Evolution of Sustainability

New Generationof Sustainability:Integration andMainstreaming

Sustainability:Triple BottomLine

Sustainability as part of business

Pure Profit

“Sustainability Zone”combinedeconomic, environmental, social benefit CSR based

initiatives

Values over ValuePure Philanthropy

Philanthropy focused

Mainstreaming sustainability using multi-stakeholder approachOperate in „Sustainability Zone‟ supporting businesses that meet economic, environmental & social objectivesInnovative financial solutions to address gamut of development issues – sustainable livelihood, food security, climate change, public health, education, information technology, biotechnology etcUsing 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 Framework

Responsible Banking in Thought

Responsible Banking in Action

RESPONSIBLE BANKING (CSR & Sustainability)Thought Leadership, Advisory, Institutionalization

AGRIBUSINESS,RURAL & SOCIALBANKING (ASRB)

Credit + Services

MICROFINANCECredit + Services

SUSTAINABLEINVESTMENT BANK (SIB)Business Planning/Structuring, M&A Advisory, Private Placement

Credit, Savings, Re mittances

FINANCIALINCLUSION BANKING

SOCIALLYRESPONSIBLE INVESTINGGrowth Capital

Responsible CorporateCitizenship (RCC)

InternalEngagemen t

YESCOMMUNITY

YESSAMPANNDirectLending

Microfinance InstitutionsGroup(MIG)

Alternative Energy&Environment

SocialEnterprises

Clean& SustainableTechnologies

BusinessCorrespondent

SouthAsiaCleanEnergy Fund

TatvaInvestment Program

Deal Generation

Other Bank Divisions:– Corporate Finance– Corporate & Institutional Banking– Commercial Banking– Business Banking– Retail Branches

Deal Generation Deal Generation

Responsible Banking: Mainstreaming sustainability principles across YES BANK

SELECT RESPONSIBLE BANKING INITIATIVES

Responsible Banking „in Thought‟A “Think Tank” incubating new business opportunities to mainstream sustainabilityProvides thought leadershipEstablishes partnerships for development - local and internationalSupports 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 AuditingStrategizing CSR practicesSocio-environmental engagementWaste managementHuman capital and employee support analysisCarbon emissions analysisSocial enterprise planning and scalabilityEntrepreneurship development and syndication of funds

Agribusiness, Rural & Social BankingInnovative financial modelsLeveraging outreach of stakeholder in Agri Value Chain to overcome „last mile‟ issuesCustomized insurance solutionsSelect Partners:

Reaching over 1 million Farmers through these Partnerships

Financing Innovative AgribusinessDeal Example

Zameen Organic Pvt. Ltd Fair trade supported company owned by Small Farmers‟

OrganizationsNetwork of 6,000 small farmers producing organic cotton in theVidharbha (Maharashtra) and Adilabad (Andhra Pradesh) regionsProvides vital processing and marketing linkage between organicfarmers and branding companiesUnique concept of Premium: Farmer Premium and

Community Premium

YES BANK is Zameen‟s Sole Banking Partner

MicrofinanceComplementary Two Pronged Approach

Programme

MicrofinanceInstitutions Group(MIG)

Approach

Wholesale – Creditpartnership withleading Indian MFIsacross the country

About the Programme

MIG's product suite includes term loans, loan syndications and rated capital market loan productsMainstreams microfinance by providing access to capital markets that reduce the cost of funds and operations resulting in affordable financial products for the BOP

Direct Intervention –Lending directly toBOP clients in urbanand rural locations

YES SAMPANN

Servicing bottom of the pyramid through a gamut of financial products and servicesFills gap of institutionally sponsored financial services provider servicing needs of low income communities in rural and urban India

Growing Partnerships and Programs to Financially Include 1000‟s

Microfinance Institutions GroupMultiplier Effect: The Indirect ImpactInstitutes specific transactions to position microfinance as a new asset

class, appealing to a broad base of investors and lenders, expanding access to capitalFIRST Indian bank to undertake innovations in capital market products for microfinance:

• Capital Market ProductsBanks have been main source of debt funding for MFIs (term loans)Term loans are relatively expensive they are illiquidYES 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• Structured

ProductsSecuritisation of receivables originated by MFIMFI 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

Supporting EntrepreneursOne person at a time Sameer started a Ceramic & Glassware

business 5yrs ago in Chembur.Presently in his 2nd Loan Cycle 1st Loan: Rs 25,000 for 5 months 2nd Loan: Rs 37,000 for 8 monthsRepayment: Weekly (1st loan) / Fortnightly (2nd

loan)Has used the Loan for Sourcing additional stockfrom Firozabad & increasing inventory. Earlier,faced problems of stock shortage due to lack ofcapital

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

A YES SAMPANNite

Monthly Household Surplus: Rs 13,318Wants to expand his business on the wholesale sideand stock other ceramic material apart from mugs,glasses & cupsI 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

Sustainable Investment Banking (SIB)

M&AAdvisory

BusinessRestructuring

Private Equity Raising

JVAdvisory

Renewable EnergyDeal Example

56% of the 700 million rural Indian residents lack access to electric power; Government wants to deliver electricity to all of them by 2012 – 50% of it from renewable resources (wind, power, solar & biogas)* M&A

YBL focused on addressing India‟s energy Private Equity

deficiency & reducing reliance on fossil fuels Business Raising Restructuring

through thrust on renewable energy

Raised USD 47 mn for Greenko, a renewable energy player, through private placement of equity shares with Global Environment Fund, one of the world‟s largest environment focused funds, for expansion of their hydro power generation assets

Advisory

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

Socially Responsible Investing

• 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.

Key Highlights – South Asia Clean Energy Fund (SACEF)Size of FundSize of InvestmentInvestment CapMinimum Investor CommitmentFund Sponsor

Fund Life

USD 200 millionUSD 3.0 - 15 million10% in a single portfolio companyUSD 2.0 millionGEF and YBL

Commitment period – 5 yearsRemaining life – 5 years with two 1year extension periods

Developing semi-commercialmodels to scale up the LaBL programA TERI and YES BANK

Partnership

TERI-YES BANKLaBL 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 BANKLaBL 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

TERI-YES BANKLaBL Financing Program

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 BANKLaBL 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.

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

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

THANK YOU