INTERVIEW WITH NAMITA VIKAS, PRESIDENT & COUNTRY HEAD (RESPONSIBLE BANKING), YES BANK

What role does a financier like Yes Bank envisage in a nascent EV space?
We envision that the financial sector will play a supportive role. However, Indian financiers lack detailed knowledge on EV technology, R&D, business models, central and state subsidy structures and consumer demand for such vehicles. Only when the financial sector understands these aspects and uncovers hidden risks in the EV value chain, will it be able to take careful decisions in terms of sanctioning loans to companies along the value chain. Therefore, right now it is very important for banks and financial institutions to critically analyse the value chain to identify risks that can be mitigated through financial products. Once the financial sector has gained the requisite knowledge on this nascent industry, it should then leverage government subsidies and rising consumer demand to provide loans for EVs at the consumer level and working capital or term loans at the manufacturing level.

What is the range of energy efficiency projects that Yes Bank is associated with?
Yes Bank’s project finance team has facilitated the financing of waste heat energy recovery systems for industrial units, LED manufacturing and clean energy generation like hydro, wind and solar.

What are the potential risks in the EV space from the financier’s perspective?
There are five key risks: Lack of indigenous battery technology – India currently lags in R&D of indigenous battery tech. Importing batteries and other critical components for EV manufacturing will continue to keep EV prices high. This is why government subsidies have been introduced in the past. Sustainability of government subsidies – In 2011 and 2012, the Union Ministry of New and Renewable Energy started withdrawing consumer subsidies for EV 2-wheelers and 4-wheelers which led to dwindling sales. Will the new subsidies introduced through the National Mission on Hybrid and Electric Vehicles be sustainable for the long-term and how long will it take for the EV industry to wean itself of relying on these subsidies are questions that need to be answered. Lack of public charging infrastructure – The lack of public charging infrastructure in India is a key concern. Studies by McKinsey and Bain clearly show a link between consumer demand and availability of infrastructure.Electricity supply and carbon footprint – Considering India is currently facing a severe energy deficit where urban areas face power cuts and 60 percent of electrical power is generated by coal, the sustainability and greenhouse gas footprint of EV public charging is questionable. Lack of indigenous EV manufacturers – Currently, in the 4-wheeler EV space, customers have only one Indian option to choose from — Mahindra Reva. The lack of choice and healthy competition will be a hindrance for the EV market.

How does Yes Bank plan to promote mobility solutions like EVs or hybrid vehicles?
We are taking a step-by-step approach to understand the EV value chain where we are certainly ahead of the curve compared to other Indian banks. We will continue to invest in developing detailed knowledge of the sector and to critically analyse each EV business model with a traditional risk management lens and foresight and provide finance to projects where we see potential, international benchmarking and customisation to the Indian industrial landscape. We are determined to support low carbon industrial growth in India, of which the EV value chain plays a key role. As our retail banking channel grows, we will explore the development and launch of EV car loans for consumers and tie up with EV OEMs and dealerships.