An interview with Somak Ghosh, Group President, Corporate Finance & Development Banking, YES BANK India - Calcalist 28 April,2009
"Our bank designated Israel as a target a long time ago... "
Somak Ghosh seeks Israeli companies interested in cooperation with Indian companies in the fields of agriculture, water and healthcare. Wanted: small to medium company which is socially and environmentally aware
Interview by Anat Tsipkin
The original interview in Hebrew from Calcalist, (PDF Version)
The global crisis does not deter Somak Ghosh, Group President of Finance and Development at YES Bank of India, from seeking business opportunities around the world, including in Israel. "Our executives are actively seeking to expand our business, and the bank has designated Israel as a target a long time ago. As far as India is concerned, this is a market with huge potential."
YES Bank is a relative newcomer, established only six years ago, with $3.7 billion in assets under management. On the occasion of his visit to Israel, Mr. Ghosh told "Calcalist" how Israel's economy came to be one of the bank's targets.
Ghosh: "We are the only bank in India which operates exclusively in areas of social and environmental added value, and there are many Israeli companies operating in our fields of interest, such as clean energy, agricultural inputs, organic agriculture, green packaging, water purification etc. We wish to be the broker between Israeli companies and Indian companies operating in similar fields. We are a young bank seeking Israeli partners. We are great believers in a strategy of constantly seeking opportunities and now, during a global crisis, the worst thing we could do would be to sit around waiting for things to happen."
As an example, Mr. Ghosh notes the Indian mega-corporation, Jain Irrigation, which 18 months ago acquired control of Israeli irrigation company, Naan Dan, located in Kibbutz Naan. "We provide this corporation with current financing for water-related projects in India", he mentions.
Principles of sustainability
"YES Bank," according to Ghosh, "is the only Indian bank which operates based on principles of sustainability (an ecological concept promoting safe and intelligent use of Earth's resources for the benefit of future generations - A.T.) Ever since the industrial revolution, humanity as a whole, and many corporations in particular, have been eating off the principal of natural resources. Such policy is harmful to the environment and is not beneficial to society."
How are the principles of sustainability reflected in the bank's business conduct?
"We believe that a business can be profitable while adhering to these principles - which have gained much recognition and appreciation around the world, and are also increasing momentum in Israel. YES Bank would support investments in companies which develop solar energy, which are engaged in sewage treatment and water purification, in the medical equipment sector etc."
Indian Ambassador is on-board
Mr. Ghosh emphasizes that this is not about philanthropy and charity operations. "Our business operations generate added ecological value, help poor people and also contribute to our profitability."
"We will not invest in companies which manufacture power stations that pollute, but we will assist companies which invest in green energy. We will not invest in companies which are not environmentally-friendly, but we will conduct business with entities which improve accessibility of remote rural areas to electric power, medical equipment or water. We will try to benefit the population in a way which is commercially profitable."
Mr. Ghosh emphasizes that the business connection between Israeli and Indian companies may bear fruit in any number of ways - by means of cooperation agreements or joint ventures, distribution agreements or mutual investment.
"We believe that economic relations between Israel and India may expand bilaterally, rather than unilaterally," says Ghosh. He would like to see many business delegations from India visiting Israel, "primarily those oriented towards investment and entrepreneurship, as distinct from those delegations which only attend high-tech and defense trade shows."
In Israel, YES Bank has a cooperation agreement with New Equity Services owned by Dov Tadmor and Jon Boock, the former CEO and CFO of Discount Investments, respectively.
Which companies have you met with in Israel?
"We have conducted preliminary introductory meetings with small to medium Israeli companies in our fields of interest. We have met with India's Ambassador to Israel, H.E. Navtej Sarna, who offered to help us, with executives of the Israel-India Chamber of Commerce and with Prof.. Stanley Fisher, the Governor of the Bank of Israel, who applauded the initiative. Later on we would like to establish a fixed presence here, but during my current visit this issue was not on the agenda."
During the interview, Mr. Ghosh compared YES Bank to larger Indian banks, such as ICICI, where he was previously employed. "ICICI, established in 1994, took 10 years to reach the current size of YES Bank - which was only established in 2003. Our growth rate is very rapid."
Mr. Ghosh notes that "bankers who work at our bank come from major banks, such as ICICI and State Bank of India. The fact that we are new does not mean that our bankers lack business experience."
Not for the large ones
The banking sector in India is composed of four types of banks: government-owned banks (about 20 in number), private banks such as YES Bank (about 30), foreign banks (some 15-20) and regional banks (over 100).
You are after all a small bank. Why should clients approach you rather than larger Indian banks?
"Our size is appropriate for the type of companies we wish to work with. We are not interested in working with billion dollar companies. These are served by the major banks in India. We seek small to medium companies, with sales ranging in tens of millions of dollars. The major Indian banks which have already established affiliates in Israel, such as State Bank of India, operate in areas different than ours, such as defense, diamonds and real estate. They expect the large clients to approach them, and this is fine. But we are willing to take the extra step for our clients."
The Indian banker agrees with common wisdom, which claims that no one knows when and how the global economic crisis will end, but is confident that it will end. As for India, he believes that the crisis has had a moderate effect. "In 2008, growth rate in India was 8.8%. This year it is expected to decline to 5%-6%, but India is still in better economic shape compared to other countries."
"Our main growth engine in India," explains Ghosh, "has been and still remains the enormous local demand - from a population of around 1 billion. A significant portion of this population benefits from a constantly growing disposable income. Furthermore, the Government has been recently expanding investment options in India, removing regulatory blockages."
"Some 90% of our business," he concludes, "is working with companies. We have no exposure to the mortgage lending market. In fact, we are the safest bank in India in terms of problem loans." |