RESPONSIBLE BANKING Business Solutions for Sustainable Development

1. RESPONSIBLE BANKING Business Solutions for Sustainable Development Rita Soni Country Head Responsible Banking YES BANK Ltd FINANCING A SUSTAINABLE LOW CARBON INDIAN ECONOMY An IBA, WWF-India, TCG Initiative 13 May 2010

2. YES BANK’s Sustainability Vision Sustainability Zone Evolution of Sustainability New Generation of Sustainability: Integration and Mainstreaming “Sustainability Zone” combined economic, environmental, social benefit Sustainability as part of business Sustainability: Triple Bottom Line CSR based initiatives Pure Profit Values over Value Pure Philanthropy Philanthropy focused • 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, information technology, biotechnology etc • Using 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

3. Responsible Banking Framework Responsible Banking in Thought Responsible Banking in Action RESPONSIBLE BANKING (CSR & Sustainability) Thought Leadership, Advisory, Institutionalization AGRI, RURAL & SOCIAL BANKING (ARSB) Credit + Services MICROFINANCE Credit + Services SUSTAINABLE INVESTMENT BANK (SIB) Business Planning/Structuring, M&A Advisory, Private Placement PRIVATE EQUITY Growth Capital Responsible Corporate Citizenship (RCC) Internal Engagement YES COMMUNITY YES SAMPANN Direct Lending Microfinance Institutions Group (MIG) Alternative Energy & Environment Social Enterprises Clean & Sustainable Technologies South Asia Clean Energy Fund (SACEF) Deal Generation Deal Generation • Other Bank Divisions: • Corporate Finance • Corp. & Inst. Banking • Emerging Corporates • Business Banking • Retail Branches

4. Environment and Social Policy (ESP) • ESP addresses social& environmental considerations and includes an exhaustive list of prohibitive activities as well such as production or trade in weapons • Embedded in Bank-wide Credit Risk Policy • Benchmarked against key sustainability financing principles of multilateral & bilateral agencies such as the World Bank group, the Asian Development Bank and the Equator Principles • Appraisal of project finance transactions ensures adherence to Credit Risk Policy, along with economic viability • Enables the Bank to recognize, evaluate, and monitor, the environmental and social facets clients • Indicative of the “walk the talk” link between theBank’s sustainability vision and its policy & processes to substantiate this

5. Thought Leadership • CLINTON GLOBAL INITIATIVE • Corporate commitments • Education: Akanksha volunteer program • Corporate Payroll Giving: GiveIndia program • Microfinance • Social Entrepreneurship: S3IDF • Health: Malnutrition Matters and STFCL UN GLOBAL COMPACT Only Indian Bank to be an active Signatory • First Indian Bank to become a Signatory • Emission disclosed for the year 2007-08 and 2008-09 • India Partners along with CII and WWF-India to encourage other companies for reporting • First Indian Bank to become a Signatory • Active participation in the Global Roundtables

6. SELECT RESPONSIBLE BANKING INITIATIVES

7. Malnutrition Matters (MM) YES BANK as Technology Transfer Agent • MM’s VitaGoat employs bicycle-powered grinders and variety of locally available fuels to prepare protein-rich soy products like soy yogurt, tofu, and milk as a lower cost, nutritious alternative to milk • Results: • VitaGoat deployed at Buldana Urban Co-operative Credit Society run residential school since 2007 • 700 school children fed daily with soy milk/paneer • Vigyan Ashram, MM & YBL to develop ultra low-cost soymilk system for microentrepreneurs, enabling greater outreach • Expansion to Rajasthan with the delivery of first VitaGoat to Seva Mandir in Jan 2010 • Expected to serve ~300-400 people per day Seva Mandir employee using VitaGoat to grind Soybeans

8. Microfinance Institutions Group (MIG) Multiplier Effect: The Indirect Impact • Institutes specific transactions to position microfinance as a new asset class, appealing to a broad base of investors and lenders, expanding access to capital • FIRST Indian bank to undertake innovations in capital market products for microfinance: • 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 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 Products • Securitisation of receivables originated by MFI • MFI 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

9. Zameen OrganicOvercoming the ‘last mile’ • 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 YES BANK is Zameen’s Sole Banking Partner

10. Sustainable Investment Bank Advisory to SME, Social & Environment Sectors • Promotes investments, provides advisory services & facilitates growth capital for social & environment focused enterprises • AsmithaMicrofinance Ltd – raised USD 10mn for one of top five Indian MFI serving ~1.16 mn clients, through private placement of equity • Gradatim IT Ventures - raised USD 3mn growth capital enabling MFI access to technological interventions that increase operational efficiencies and reduce costs

11. Responsible BankingBusiness Results Quality of Assets Size of Business • ONLY private sector bank to consistently exceed RBI’s PSL targets (in terms of agriculture specific and overall targets)over the last three years(Source: RB Portfolio comparison using RBI data) • Consistently maintained ZERO non-performing assets (NPAs) in RB portfolio which is generally 12-13% at other banks (Source: RBI data) • Tracks at 43% of loans & advances; growth of 34% of interest income • Growth in both absolute & percentage terms from FY08 • With MIG portfolio of USD 100mn reaching 1.4mn individuals, microfinance constitutes 11.07% of RB portfolio – highest among Indian commercial banks; next highest, ING at 7.55% (Source: Bank analysis of MF Sector, using data from ACCESS Development Services & RBI) • Despite Bank’s limited rural presence, ARSB reached 1.3mn farmers; 25% growth year on year with portfolio of USD 547mn. • SIB generated fee income of 2.5x cover on costs, institutionalizing revenue stream where none existed

12. Thank You!