Yes Bank – BusinessWorld Transformation Series

TEAM BEANSTALK

Symbiosis Centre for Management &

Human Resource Development
(SCMHRD )

Plot No: 15, Rajiv Gandhi Infotech Park ,

MIDC, Hinjewadi, Phase – 1 , Pune

Pin Code – 411057

25 Feb 2010.
 EXECUTIVE SUMMARY

 To build and maintain a world class Human Capital, TPBoI should have a strong Induction,
&Mentorship programs.
 Knowledge Management along with identification of necessary Job-Specifications
/Competencies required can help in maintaining the Organization Culture.
 To attract the best talent from various areas, TPBoI should work towards creating an
Aspirational Brand for prospective employees.
 Incentives both monetary &non monetary can help in retaining human capital
 Steps like Employee Referrals, recruiting from the top educational institutes would ensure
quality human capital inflow.

 TPBoI can enter businesses like Mutual Funds(AMC) & Insurance having low penetration by
partnering with foreign partners and also creation of a PE/Venture Fund where high demand for
capital exists.
 TPBoI should take advantage of the strong possibility of Government increasing the FDI cap in
Insurance to 50% , &enter the Life-Insurance Business with ULIP policies.
 Coupled with growth opportunity and low initial capital requirement, MF(AMC) is an attractive
field.
 TPBoI can leverage its knowledge in various fields of the economy by entering the
PE/Venture Capital Business
 The AMC &PE/Venture Funding are expected to make profits from 2014 while Insurance Business
would be loss making during the period.
A. Building World Class Human Capital:

a) Building and retaining the distinct identity and culture of an organization involves having very well
defined ethos and values which are deeply imbibed in the organization’s people. Since TPBoI is
currently a young organization, it is natural that it has a unique personality and identity which its
employees and other stakeholders identify with. However, the rate of growth projected for the bank in
the retail banking business is likely to make retention of this identity a difficult task. The following steps
could be undertaken by the bank to ensure smooth transition during the growth:

 Knowledge Management: Have clearly documented policies and procedures which can
be used as a credo by the changing workforce to maintain a standard of work.
 Strong Mentorship: Ensure that the organizational structure is able to accommodate the
fresh talent that is coming in, while continuing to utilize the experience and learned code
of conduct of the senior employees. This can be done by building many cross-functional
teams, where senior members can act as mentors
 Thorough and structured induction: It is very important that the new employees entering
the organization are taught the ropes of the organization from day one itself. Therefore, a
carefully planned induction policy is critical.
 Clearly defined job specifications and competencies: It is critical that the recruitment is
done in such a way that no hired employee fits with TPBoI’s culture. Hence, the
competencies – both behavioral and technical – of the prospective employees must be
clearly defined and detailed.
b) Since TPBoI is a growing organization, the strongest instrument it has to attract, retain as well as
motivate its current and prospective employees is through highlighting its growth prospects. The
following are some suggestions to do the same:

 Aspirational Employer Brand: A young and rapidly growing organization like TPBoI
must capitalize on its accelerated growth to build a strong brand for itself. TPBoI can
recruit skilled labour from the top educational institutes across the country. Setting up a
knowledge sharing website would help the firm to understand and connect with its
prospective employees. On the whole, this would help in creation an aspirational brand
for prospective employees.
 Non – Knowledge Workers: TPBoI has a manpower that mainly consists of knowledge
workers. It lacks the manpower to reach out. Hence in order for the Allied Business arms/
Retail Division to succeed. It needs to recruit and train effective sales teams.
 Attractive Incentive policy: An innovative Rewards & Recognition policy needs to be put
in place to ensure that current employees are motivated and see due benefits of superior
performance. Since the growth prospects of the organization are so high, it may even make
sense to offer leadership opportunities as Rewards to excellent performers.
 Referrals for Talent Attraction: This can be done best through employee referrals and
recommendations in the marketplace. A strong brand and good recommendations will
also help in attracting better talent for recruitment
 Sharing Profits: Since TPBoI is seeing so much success so early in its career, it is important
to share this success with those who have made it possible. If early in an organization’s
life-cycle, it instils in its employees a strong organizational citizenship, it would make it
easier to retain as well as motivate the employees later.
C) PROSPECTIVE ALLIED BUSINESSES WHERE TPBoI CAN VENTURE INTO:

In order for TPBoI to be successful in its allied business, it is essential that its Retail Banking is
developed and its reach is increased. We recommend that TPBoI could venture into the following areas
of allied businesses:

1) Mutual Funds
2) Life Insurance
3) Private Equity/ Venture Capital

a. BUSINESS SENSE / SYNERGY WITH EXISTING BUSINESS AREAS:

MUTUAL FUNDS

 As seen from the above data, the penetration level of the Mutual Funds in India is very low
which presents a great scope for development.
 The expertise of TPBoI in Wealth Management could be leveraged through knowledge transfer
and the success story can be repeated in its new AMC.
 It should not find any regulatory hurdles as it meets the required criteria. TPBoI can look for
partnering with an international partner with expertise in the Mutual Funds division.
 Since it has its own retail banking arm, it can save on its distribution costs and thereby providing
better alternatives than its competitors.
LIFE - INSURANCE SECTOR
Life premium/ GDP (%)
 As we can see, low penetration level in
10 8.9
both the Life category provides a huge 9 8.32
8 7.27 7.08
opportunity. 7
6
5 4.14
 With the Retail Banking division being 4
3.6 3.51
2.53
3 1.78
2
shored up TPBoI can look for providing 1
0.82

0
its SME customers with Group

UK

India
Malasiya

Australia

Indonesia
US

China
Korea
Japan

France
South
Insurance thereby ensuring that it
provides its customers with end –to-end
services along its line-of-thought.
 The focus in the initial years should be on ULIP policies due to the synergy of it with the existing
Wealth Management business.
 Raising of capital in a capital intensive Insurance can be achieved by roping in a foreign partner,
who are prepared to pay a share premium inorder to have operations in India.
 Being a growth company, this would be the right time for the organization to enter the business.
Further delay should be avoided as it already is around the 20th player.

PRIVATE EQUITY/ VENTURE CAPITAL:

Notwithstanding the contraction of capital raising in 2008, private equity funds' interest in India is not
waning

New Private Equity Deals Look Different

• More private equity firms are investing alongside corporate partners or sovereign wealth funds.
• Longer holding periods due to more time spent on improving operational performance of portfolio
companies
• Exits will be delayed until the after-effects of the financial crisis subsides.
 With the number of ventures requiring capital infusion in the country set to increase
exponentially in the next five years, funding of these firms through a PE Fund provides a huge
investment opportunity.
 Since TPBoI has already built up its knowledge in emerging sectors like Agriculture, realty, IT,
consumer markets and many other areas it would make sense to venture into this area of
business as it gives them a head start in identifying rapidly growing business entities with sound
business model in these sectors.
 The funded companies can also gain advantage from TPBoI’s knowledge in diversified sectors
which can help in its operations/decision making.
 Since TPBoI being very well capitalized,the initial funds required for starting the business can be
easily arranged for.
b. Top Level Financials of Allied Business(Projected)

1. TPBoI Asset Management Company (In Rs.Millions)

Basis of Projections:
1) Growth in AUM @ 30% in 2012 and 35% thereon.
2) AMC business started with 5 types of schemes(Money Market, Debt, Gilt, Equity& Balanced)
initially. As the pool of funds increases, more schemes may be introduced.

2. TPBoI Insurance Company (In Rs.Millions)

Basis of Projections:
1) TPBOI contribution to equity 80% in 2010, 75% 2011 onwards
2) Overall Premium growth 25%, 35% & 40% respectively in three years
3) Renewal premium considered as 90% of the last year's collections
4) Expenses & provisions for change in liability is high during later years due to increase in volume
of business
5) Gestation period expected to be around 6 years
6) Capital infusion from foreign partner will be high because shares expected to be issued at a
premium
 3. TPBoI Private equity (In Rs.Millions)

Basis of Projections:
1) High incomes in 2014 is due to profit booking by TPBoI in the form of exiting a business or
selling some stake in a funded entity.

Top Level Financials of TPBoI Group

Balance Sheet of TPBoI Group (Projected) (Rs. Millions)

1) CASA to increase from 9% to 25% by year 2012 and is maintained at that level for the next two
years.
2) Number of branches is expected to grow from current level of 193 to 750 by the year 2015.
3) Number of Employees is expected to grow from 2700 to 10,000 by the end of the year 2014
4) Additional capital Injected for enhancing growth and maintaining CRAR at around 15% will be
$250 million in the first year and around $1 Billion over the next 3 years
5) Targeted 3000 ATMs operated by the year 2015
6) Assets are set to grow at 38%
Profit and Loss account of TPBoI Group (Projected) (In Rs. Millions)

Projection basis:
1) The Net Interest Income of the company grows by 50% due to a similar increase in CASA and the
growth rate would gradually decrease to 40% by the year 2015
2) The other Income of the Bank would grow at an average constant rate of 20% YoY initially as the
bank forays into businesses like Insurance, Mutual Funds and Private Equity
3) The operating Expenses of the bank is projected to increase by 40% YoY as it tries to provide
wide services and puts thrust on retail banking operations
4) The Net profit of the bank is expected to grow at 45% in the year 2010 and is expected to grow at
around 35-40% annually.