Vinay Tonse's SBI Retail Banking Expertise Poised to Drive Yes Bank's Next Phase
In a significant development for India's banking sector, Vinay M. Tonse, a former State Bank of India executive, has been approved by the Reserve Bank of India as the next chief executive of Yes Bank Ltd. This appointment comes at a pivotal moment for the private lender, which has undergone a remarkable transformation since its near-collapse in March 2020.
A Bank Transformed: From Crisis to Stability
When Tonse assumes leadership, he will inherit a fundamentally different institution from the one that required emergency intervention six years ago. The bank, founded by Rana Kapoor, faced imminent collapse until the RBI orchestrated a rescue involving SBI, ICICI Bank, and Kotak Mahindra Bank. These institutions infused capital after the regulator superseded the board, setting Yes Bank on a path to recovery.
Analysts at Ventura Research noted in a January report that "Yes Bank's history shows that growth was never the constraint, risk was." The bank's aggressive corporate lending in early years built size but accumulated asset-quality risks that culminated in the FY19-20 crisis. However, the journey from elevated stress to one of the industry's lowest net bad loan levels reflects a transformed credit culture.
The transformation has been substantial:
- Bad loans as percentage of total loans dropped to 1.5% in December from 18.9% in December 2019
- Low-cost deposits improved to 34% from 32.1% six years ago
- The balance sheet was cleaned through ₹48,000 crore stressed loan offload to J.C. Flowers Asset Reconstruction in 2022
Tonse's Retail Banking Pedigree: A Perfect Match for Yes Bank's Needs
At 60 years old, Tonse brings precisely the expertise Yes Bank needs most. As the former head of SBI's retail banking division, he managed a retail book of nearly ₹16 trillion – over six times Yes Bank's entire loan book. This experience is particularly valuable as analysts emphasize that "a strong profitable turnaround in the retail segment holds the key" to Yes Bank's future success.
Nomura analysts project that return on assets could gradually improve to 0.9%-1.1% by FY27/FY28, up from 0.8% in the first nine months of FY26. This improvement is expected to be driven by:
- Better margins through enhanced deposit strategies
- Sustained momentum in fee income generation
- Controlled credit costs through prudent lending practices
The Deposit Challenge: Tonse's Immediate Priority
Tonse faces immediate challenges in deposit growth, where Yes Bank lags behind peers. The bank reported only 5.5% year-on-year deposit growth to ₹2.9 trillion in Q3 FY26, compared to 24% at IDFC First Bank and 11.8% at Federal Bank. Similarly, Yes Bank's net interest margin of 2.6% trails IDFC First Bank's 5.7% and Federal Bank's 3.18%.
The new CEO will also benefit from Yes Bank's strengthened capital position following Japanese lender Sumitomo Mitsui Banking Corp's investment. SMBC acquired 24.2% in two transactions, including a 13.2% stake purchase from SBI for ₹8,889 crore in September 2025. SBI retains approximately 10.8% ownership, maintaining a strategic interest in Yes Bank's success.
Strategic Continuity and Future Planning
Former SBI chief financial officer Prashant Kumar, who joined Yes Bank as part of the initial rescue, will continue for six months from October 6 or until a successor is appointed, ensuring leadership continuity. During the Q3 earnings call, Kumar revealed that the board has begun succession planning for the top position, with a decision expected in the current quarter.
"If you see continuously, every quarter has been better than the previous quarter," Kumar noted during the January analyst call, while emphasizing the bank's commitment to a calibrated and cautious approach. The bank plans to formulate a comprehensive five-year strategy by next quarter, providing Tonse with a clear roadmap for his tenure.
As Yes Bank shares rose nearly 1% to ₹21.52 following the RBI approval announcement, the market signaled confidence in Tonse's appointment. With his deep retail banking experience from SBI and a cleaner Yes Bank balance sheet, Tonse appears well-positioned to address the deposit growth challenge and steer the bank toward sustainable profitability in its next chapter.
