Yes Bank is prioritising the strengthening of its fundamentals across people, processes, products, and technology while pursuing steady growth in both corporate and retail segments, according to Managing Director and Chief Executive Officer Vinay Tonse. In an exclusive interview with *The Economic Times*, Tonse said the bank is focused on enhancing its operational backbone and employee engagement as part of its long-term strategy. “I track four key pillars—people, processes, products, and technology,” he said. “If your internal customers, your employees, are fulfilled and engaged, it becomes far easier for them to fulfil your external customers.” With a workforce of 30,000, Tonse emphasised that employee satisfaction remains central to delivering better service to external customers.
On the financial front, Tonse expressed confidence that the bank’s net interest margin (NIM) can move towards 3%, up from the current 2.6%. He cited two key factors supporting this outlook: the runoff of the Rural Infrastructure Development Fund (RIDF), which will improve NIM as it winds down, and a reduction in deposit costs. He also noted a positive shift in customer behaviour, with individuals returning to bank deposits from equities and mutual funds due to market volatility. “Anecdotally, I have started seeing that there are increasing enquiries from customers asking whether it is time to exit equities and come back to deposits,” he said. This trend is expected to boost current account and savings account (CASA) growth, providing a stable funding base.
Regarding strategic partnerships, Tonse confirmed that synergies with Sumitomo Mitsui Banking Corporation (SMBC) are already yielding business results. An MoU is in place, and SMBC has begun referring corporate clients to Yes Bank where it cannot extend further financing. These relationships are also enabling the bank to tap into employee banking ecosystems and supply chain financing opportunities. “Even in the last one-and-a-half months, we have started seeing results flowing from this,” he said, adding that the partnership is expected to deepen further in the coming quarters.
Addressing lending risks, Tonse adopted a cautious stance on micro, small and medium enterprises (MSMEs) amid ongoing geopolitical tensions in West Asia. He stated that the bank will not be aggressive in MSME lending until the situation stabilises. However, he reassured that no immediate stress is visible in the bank’s book due to the crisis. “We have done a detailed analysis of our book and do not see any specific stress emerging from the West Asia crisis at this point,” he said. The bank is closely monitoring assets with exposure to the region and has not observed any undue anxiety among clients.
On asset mix, Yes Bank aims to rebalance its loan portfolio with a stronger emphasis on retail banking. Currently, corporate assets account for 28–29% of the total book, commercial segments 24%, and retail assets 46–47%. Tonse outlined a target to increase retail assets to around 50% of the total book, reduce corporate exposure to 25–26%, and maintain commercial at about 25%. He highlighted the strategic value of corporate relationships not just for lending, but for cross-selling products like salary accounts, supply chain financing, and invoice discounting—a model he termed “ecosystem banking.”
Despite the rise of digital banking, Tonse stressed the enduring importance of physical branches. “Banking at its core remains a very human, brick-and-mortar business,” he said. “Technology can support it, but it cannot substitute it.” Yes Bank currently operates 1,300 branches and plans to expand by approximately 400 new branches over the next four to five years. Last year, the bank opened 82 branches, and this year, it expects to open around 80–90 more, as part of a broader retail franchise expansion strategy.
Looking ahead, Tonse reiterated the bank’s ambition to regain a top position among private sector lenders in India. “We are ambitious to become one of the top five private sector banks in India and we are working towards it,” he said. While the bank was once the fourth-largest private lender, it is now focused on sustainable growth, improved margins, and deeper customer relationships through both digital and physical channels.
