India ChartbookDecoding Demonetization

Business Economics BankingDecember 2016

2

YBL View: Summary

DemonetizationWe expect demonetization to accrue significant benefits in the medium term throughformalization of the economy. In the short-term however, we expect significantnegative impact on growth as economic agents adjust to liquidity crunch.

GrowthWe revise down our FY17 GDP growth forecast to 6.7% from 7.6%.

InflationWe maintain our CPI inflation forecast at 4.8% in FY17 compared to 4.9% in FY16. Webelieve demonetization could impact a marginal downside bias to our estimates.

Monetary policyThe undershooting of inflation vis-à-vis target and MPC’s preference for revivinggrowth creates room for additional monetary easing. We expect a cumulative 50 bpsrate cut by Apr-17. Meanwhile, liquidity fine tuning to continue via MSS/ ReverseRepo.

ExternalWe calibrate our INR forecasts, in line with unexpected US dollar strength followingUS elections and shift in sentiment against EMs but expect strong domesticfundamentals to cap the downside.USDINR is expected to reach 68 by Mar-17, moving to 70 over the next 12-monthhorizon.

3

Demonetization

4

Assumptions:1. Parallel economy estimated at 21% of total GDP as of 2007. Cash maintained at 13% of black wealth equivalent to Rs 4

trn. 50% of black wealth in form of cash to not be disclosed for fear of legal repercussion2. No. of maximum unique accounts estimated at ~490 mn, of which 250 mn Jan Dhan accounts. Assuming entire

outstanding balance of Jan Dhan accounts to be withdrawn (Rs 0.5 tn), adding withdrawal limits of Rs 24,000 per weekon non Jan Dhan account, maximum withdrawals to be capped at Rs 10-11 tn over a period of time.

Demonetization – YBL analysis

Rs 500 and Rs 1000 notes account for 85% of total

currency in circulation or ~ Rs 15 trn

Destruction of unaccounted wealth1

Withdrawal up to maximum of Rs 13 trn

based on limits and unique accounts2

Durable deposits to increase by Rs 1-2 trn in the

banking system

Blended cost of funds for banks to reduce as CASA deposits go up. MCLR to

witness quicker transmission leading to

lower lending rates

Expect banks to reduce deposit rates by ~50-75 bps

over the next 6-9 months

5

Demonetization: Flowchart of likely impact

Near Term Liquidity Shock (Nov-Mar FY17)

•Supply chain disruption

•Challenges for rabisowing

•Deferment of discretionary consumption

•Decline in labor productivity

•Setback for illegal and anti-national activities

Re-monetization

•Expected to take at least 3-months

•Re-monetization to proceed gradually from urban to rural centers

Medium Term (FY18 onwards)

•Structural jump in bank deposits

• Aid financial inclusion

•Enhancement of monetary policy transmission

•Lower interest rates

•Higher fiscal revenue

•Boost in transparency and productivity

The liquidity shock from demonetization is expected to be temporary and have transient negative impact on economic activity in cash intensive sectors

With re-monetization, the negative impact will taper, with economic activity expected to regain momentum from Q1 FY18 onwards

6

Demonetization: Sectoral impact

•E-Commerce•Banks

Positive

• Consumer Durables• Gold• Real Estate• Mining• Auto• FMCG• NBFCs

Negative

•IT•Pharma

Neutral

Short Term (Nov-Mar FY17)

• E-Commerce• Banks• NBFCs

Positive

• Gold

Negative

• IT• Pharma• Auto• Consumer Durables• FMCG• Mining• Real Estate

Neutral

Medium Term (FY18 onwards)

7

Trend in bank deposits and withdrawals

After the initial gush, the run rate for depositing old currency has started tomoderate from a daily average of INR 600+ bn in Week 1 to a daily average ofaround INR 450-500 bn in Week 3If this trend continues, then the deposit figure could touch INR 1400 bn by midDec-16Pace of withdrawal is expected to have picked up momentum on account ofsalary withdrawal from accounts at the beginning of December month• From a daily average of INR 129 bn in Week 1 to a daily average of around

INR 190 bn in Week 3

Cumulative Delta

Deposited Exchanged Withdrawn Deposited Exchanged Withdrawn

18-Nov 5116 330 1033 5116 330 1033

27-Nov 8110 339 2166 2995 9 1133

5-Dec* 11554 339 3496 3444 0 1330

* YBL estimate

Note: Post Offices have collected INR 326 bn and exchanged old notes worth INR 37 bn as of 27-Nov

8

Trend in money market liquidity

From a deficit position of INR 557 bn as on Nov 9, money market liquiditycurrently stands at a surplus level of INR 3.1 trillion

Liquidity Infusion(Nov 9 – Dec 5)

•Deposits (INR 11500 bn)•Government Spending (INR

400 bn)

Liquidity Outflow (Nov 9 – Dec 2)

•Withdrawals (INR 3500 bn)•CRR hike (INR 3200 bn)•CMB issuance (INR 1650 bn)•FCNR(B) maturity (INR

1000 bn)

Note: Amount in table is a rounded off approximation

9

Economic data post demonetization

Services PMI has shown a greater impact vis-à-vis Manufacturing PMIAuto sector has seen a contraction in annualized sales• 3W, CV, and 2W sales most impacted so far

Rabi cultivation has not depicted any signs of pressure due to demonetizationwith healthy progress observed so far

Oct-16 Nov-16

PMI – Manufacturing (Index) 54.4 52.3

PMI – Services (Index) 54.5 46.7

PV Sales (% YoY) 4.5 1.8

2W Sales (% YoY) 8.7 -5.9

3W Sales (% YoY) 4.3 -25.9

CV Sales (% YoY) 11.9 -11.6

Nov-4 Nov-11 Nov-18 Nov-25 Dec-2

Area Sown (Rabi) -8.3 15.9 -0.7 4.6 8.5

Note: Data for rabi sowing shows change in area sown vis-à-vis corresponding period last year

Note: PMI value below 50 indicates contraction in activity

10

Economic data post demonetization (cont’d)

Barring cereals, all major food items have softened in the month of Nov-16 as perhigh frequency data collected from various government sources• Information for first 4-days of Dec-16 confirms further correction in food

pricesWe expect CPI Food Index to contract by 0.2% MoM in Nov-16 vis-à-vis anexpansion of 0.5% observed in Nov-15• Headline CPI inflation for Nov-16 is expected at 3.95% YoY, down from

4.20% YoY in Oct-16

Weight in CPI Nov-15 Nov-16Cereals 9.7 0.08 2.19Pulses 2.4 2.30 -0.04Vegetables 6.0 -0.10 -7.07Fruits 2.9 -3.68 -1.80

% MoM change in key food items

With CPI inflation expected to undershoot RBI’s 5% target for Mar-17 by 50-60 bps, thereby creating room for incremental 50 bps rate cut by Apr-17

11

FY17 real GDP growth expected at 6.7%

Growth supportive factors

Growth limiting factors

Bottom line: We revise down our FY17 GDP growth forecast to 6.7% from 7.6% previouslyThe demonetization is expected to impact growth in the short-term with the cash crunchimpacting discretionary consumption and cash transaction heavy sectors. We expect growthmomentum to normalize from Q1FY18 onwards. Growth in FY17 is expected to be supportedby normal monsoon, 7th CPC payouts, public sector led capex and lower interest rates.

Normal monsoon 7th CPC payouts (since Aug.) Public sector capex Lower interest rates

Demonetization to drag growth in Q3 & Q4. Impacting consumer durables and cash transaction heavy sectors

External demand weakness

12

Inflation

13

October Recap: Food driven disinflation continues

CPI and WPI inflation eased to 14-month and 4-month low respectively in Oct-16,driven by continued moderation in food inflationOn monthly momentum basis, while food prices continued to ease on wholesaleside, retail prices saw a marginal uptick in the monthThe festivity related uptick in prices usually seen in pre-Diwali month in items ofdiscretionary consumption remained muted this time

CPI and WPI inflation eased further in October… …as food prices continue to see tepid momentum

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0.5

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2.5

3.0

Apr May Jun Jul Aug Sep Oct

CPI Food %MoMWPI Food %MoM

-6

-4

-2

0

2

4

6

8

Jan-

15Fe

b-15

Mar

-15

Apr

-15

May

-15

Jun-

15Ju

l-15

Aug

-15

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15O

ct-1

5N

ov-1

5D

ec-1

5Ja

n-16

Feb-

16M

ar-1

6A

pr-1

6M

ay-1

6Ju

n-16

Jul-1

6A

ug-1

6Se

p-16

Oct

-16

CPI Inflation (%YoY) WPI Inflation (%YoY)

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November dynamics: Mixed, so far

MSP average increase announced was 9.4% compared to 7.3% in FY16Impact of MSP hike on CPI & WPI is estimated at 26 bps & 15 bps respectively.Price momentum for key food items for Nov-16 has so far been mixed, with fruitsand vegetables showing disinflationVegetable arrivals continue to maintain momentum, as opposed to media reportsstating a decline post 8th Nov demonetization announcement

MSP Hikes marginally higher across the board, bonus incentive for pulses continues

Price momentum for key food items mixed, so far in Nov-16

Price (in Rs) Bonus %YoY Price (in Rs) Bonus %YoYWheat 1525 5.2 1625 6.6Barley 1225 6.5 1325 200 8.2Gram 3425 75 7.9 3800 200 10.9Masur (lentil) 3325 75 8.1 3800 150 14.3Rapeseed/Mustard 3350 8.1 3600 100 7.5Safflower 3300 8.2 3600 100 9.1

2015-16 2016-17

Rabi CropSep-16 Oct-16 Nov-16

Fruits -3.7 -4.8 -1.2Vegetables -7.8 1.0 -4.9Cereals 0.2 0.1 1.6Pulses -5.8 1.8 2.3Milk 0.4 -0.1 -0.2Sugar -0.3 0.5 0.2

Monthly price increments (%)

TimeBitter

GourdBrinjal Long

Brinjal Round Cabbage

Cauli-flower Garlic Ginger Chilly Okra Onion Peas

Potato Fresh

Potato stored

Tomato Hybrid

Tomato local Total

Upto 8th Nov 258 249 582 1393 1245 573 1425 1189 365 15651 183 4653 4555 2948 1095 36364

8-17th Nov-16 237 309 702 1504 1503 648 1538 1266 370 14818 183 4990 6132 3044 1122 38366% Change -8 24 21 8 21 13 8 6 1 -5 0 7 35 3 3 6

Vegetable Arrivals in Mandi

Opposed to media news, we find that vegetable arrivals has not been dented since demonetization announcement

15

CPI Inflation to moderate further to below 4% from Nov onwards

CPI inflation expected to moderate further to below 4%YoY from Nov onwardsaided by –o Improved Kharif output and reservoir water levels supporting Rabi outputo Rabi sowing currently stands at 214.73 lakh hectares, ~1% lower than same

period last yearo Demand-push factors remaining benign with the recent demonetization

adding to the downsideWe expect FY17 CPI inflation to broadly track 4.8% vs. 4.9%YoY in FY16

-15%

-10%

-5%

0%

5%

10%

15%

20%

0%

2%

4%

6%

8%

10%

12%

14%

16%

FY07 FY08 FY09 FY10 FY11 FY12 FY 13 FY14 FY15 FY16 FY17*

CPI food inflationKharif Food grain production ~rhs

CPI industrial worker used till FY12. New CPI used from FY13 onwards

* CPI in FY17 is over Apr-Aug period and kharif food grain production is first advanced estimate

Rise in kharif food grain output… …To support moderation in CPI inflation

2

3

4

5

6

7

8

9

Mar

-14

Jun-

14

Sep-

14

Dec

-14

Mar

-15

Jun-

15

Sep-

15

Dec

-15

Mar

-16

Jun-

16

Sep-

16

Dec

-16

Mar

-17

CPI (% YoY)

YBL estimate

16

Rates View

17

Assessing RBI’s monetary policy space

The RBI has been overachieving its inflation glide path target so far• Government notified its inflation target of 4% with a band of +/-2%,

applicable till end FY21• Undershooting of Mar-17 inflation target by as much as 50 bps provides

room for another incremental monetary easing

0

1

2

3

4

5

6

7

8

9

2014

2015

2016

2017

2018

2019

2020

2021

CPI (% YoY)1st Glide Path Target

2nd Glide Path Target

3rd Glide Path Target

Government's Notified Inflation Target Band

Long Term Target

18

Rates outlook

Despite a surge in US yields post Trump’s election win, local market yields havedefied global pressuresWith expectation of 50 bps rate cut from the RBI by Apr-17 and approx INR 1-2 tnimprovement in banks deposits on a structural basis (post demonetization), weexpect 10Y g-sec yield to soften to 6.25% by Mar-17

Downside Risk Factors• Delay in anticipated growth recovery

post demonetization• Higher than expected structural

improvement in bankUpside Risk Factors• Geopolitical risks• Fed tightening in 2017• Firming up of commodity prices, esp. oil• Supply of UDAY bonds in Q4 FY17

6.0

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7.8

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1.4

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1.8

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2.2

2.4

2.6

Jan-

16

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16

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-16

Apr

-16

May

-16

Jun-

16

Jul-1

6

Aug

-16

Sep-

16

Oct

-16

Nov

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UST 10Y Yield (%) India 10Y G-sec Yield (%, RHS)

19

INR view

20

INR weakness: More global than domestic

Aftermath of the US Presidential elections: Dollar strength and EM outflowsMonetary policy path of major global central banks (US Fed, BoJ, ECB, BoE, PBoC)Unfolding of the Brexit processEconomic rebalancing in ChinaOthers: Commodity price volatility, shift from monetary policy to fiscal policy andstructural reforms

Key global FX themes

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65.5

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n

15-J

an

29-J

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eb

26-F

eb

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ar

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ar

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ay

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ay

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ep

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ct

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Indian rupee timeline

Brexit fears elevated

Japan introduces negative rates unexpectedly

Second round China devaluation

US dollar softness, global risk-off on EU referendum vote

US dollar softness, GST passed in Rajya Sabha

UK Brexit vote

RBI Governor announces departure

Equity outflows, hawkish Fed commentary

Reports of government's INR devaluation plan

USD strength post US election, positive US

data; low GDP concerns post demonet.

21

Trumpimpact triggers fresh volatility

Global financial markets have been roiled by a fresh phase of volatility since theelection of republican candidate Donald Trump as US President-electAs markets were caught off-guard, the response has been abrupt, with an initial phaseof risk-off followed by an equally rapid shift to risk-on sentiment.Markets perceive Trump’s victory as positive for US fiscal policy reforms and likelyinflationary, which in turn would allow the Fed to stick to its rate hike trajectory of 50bps in 2017USD has risen ~4.9% from pre-election trough to trade near 14-year highs, with marketperceived probability of a December rate hike having surged to 100%

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b

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ar

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ar

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ay

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ay

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l

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ug

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ug

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p

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ep

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ct

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Dollar index

JP Morgan EM FX Index (rhs)

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man

y

Change in 10-year bond yields (bps)

22

Case for US rate hike already strong

Trump’s election agenda aside, the case for an imminent rate hike in the US hasalready been building-up amid strengthening domestic macrosAs per the US Fed’s own admission, “job gains have been solid” and the “economy isoperating reasonably close to maximum employment”. US central bank’s preferredmeasure (core PCE inflation) has climbed to 1.7%, the highest since May 2015Latest Fed commentary suggests that Fed officials could be in consensus with regardto a December rate hikeOur base case is for a December rate hike, followed by a 50 bps rate hike in 2017

0%

20%

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60%

80%

100%

120%

3-months ago 1-month ago Current

December meeting February meeting March meeting

Probability of Fed lift-off for the next three Fed meetings

An increase in rates could “become appropriate relatively soon if incoming data provide some further evidence of continued progress toward the Committee's objectives”

“holding the federal funds rate at its current level for too long could also encourage excessive risk-taking”

US Federal Reserve Chair Janet Yellen, November 2016

23

BoP dynamics remain supportiveExports may have bottomed across categories

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5

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16

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6

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16

Primary product exports (USD Bn)

Petroleum products (USD Bn; rhs)

Manufactured exports (USD Bn)

Export volumes are holding-up well

Salt, sulphur, lime and cement (22%) Edible oils (8%)Misc. mfd articles (17%) Fish and crustaceans (6%)Sugars and confectionary (29%) Paper and articles (7%)Footwear (16%) Tanning products and dyes (17%)Plastic and articles (27%) Leather and products (10%)Inorganic chemicals, compounds of precious metals (11%) Tobacoo and products (15%)

Edible vegetables and roots (25%) Project goods, some special uses Apparel and clothing articles (6%) Tin and articles (76%)Electrical machinery and equipment (7%) Optical instruments (14%)Articles of stone, plaster, cement etc (10%) Aluminium and articles (10%)Misc. chemical products (8%) Other veg. textile fibres (22%)

Year-to-date volume growth (%YoY) of major exports

Demonetization to shave-off non-oil imports further FII outflows a concern

USD BnJul-16 Aug-16 Sep-16 Oct-16 Apr-Oct

FY16Apr-Oct

FY17Exports (1) 21.7 21.5 22.9 23.5 155.2 155.6 %yoy -6.8 -0.3 4.6 9.6 -16.9 0.4Imports (2) = (3) + (4) 29.5 29.1 31.2 33.7 233.4 208.7 %yoy -19.0 -14.2 -2.5 8.1 -14.4 -10.3 Oil imports (3) 6.8 6.8 6.9 7.1 55.1 46.6 Non-oil non-gold imports 21.6 21.2 22.5 23.0 159.1 150.6 Gold imports 1.1 1.2 1.8 3.5 19.2 11.5Trade Balance = (1) - (2) -7.8 -7.6 -8.3 -10.2 -78.2 -53.1

India Trade Dynamics*

24

INR: YBL forecasts

USDINR Current Dec-16 Mar-17New forecast 68.7 68.5 68.0Old forecast - 67.5 67.0

Upside in the INR amid unexpected domestic and global events: Unanticipated USD strength post US election Domestic market volatility following demonetization

Macro-fundamentals remain unchanged: Strong domestic macros, policy credibility, comfortable domestic and external

sector ratios and policy credibility to continue to cushion INR from sharpdepreciation

INR to continue to outperform peers

Key future events to watch: Global: US Federal Reserve monetary policy meeting on December 13-14, 2016 Global: US President-elect Trump’s policy announcements in 1Q2017 Domestic: India Union Budget in 1Q2017

USDINR to reach 68 by Mar-2017, with an eventual move to 70 over the next 12 months

25

Key YBL ForecastsFY13 FY14 FY15 FY16 FY17

(YBL)Balance of

RiskLast Change in

Forecast

Annual Forecasts

Nominal GDP (%) 13.9 13.3 10.8 8.7 10.5 Neutral Down (Nov-16)

Real GDP (%) 5.6 6.6 7.2 7.6 6.7 Neutral Down (Nov-16)

CPI (%, Average) 9.9 9.4 6.0 4.9 4.8 Downside No Change

WPI (%, Average) 7.4 6.0 2.0 -2.5 3.5 Downside No Change

Fiscal Balance (% of GDP) -4.9 -4.4 -4.0 -3.9 -3.5 Neutral No Change

Current Account (% of GDP) -4.7 -1.7 -1.3 -1.1 -0.5 Neutral Up (Nov-15)

BoP (USD bn) 4 16 61 18 12 Downside Down (Nov-16)

Q4 FY16 Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 (YBL)

Balance of Risk

Last Change in Forecast

Quarter End Forecasts

Repo Rate (%) 6.75 6.5 6.5 6.00 5.75 Neutral Down (Nov-16)

CRR (%) 4.00 4.00 4.00 4.00 4.00 Upside No Change

SLR (%) 21.5 21.25 21 20.75 20.50 Neutral No Change

10Y G-Sec Yield (%) (eop) 7.71 7.46 7.13 7.12 6.25 Neutral Down (Nov-16)

USDINR 67.5 66.9 67.0 68.5 68.0 Upside Up (Nov-16)

26

Thank You!

27

Appendix

28

Useful facts and figuresCash dominates the Indian economy 85% of currency in circulation in Rs500 &

Rs1000

Majority household savings in physical assets Household hold 13.5% of financial assets in cash

13.5%

41.3%

2.7%

18.3%

14.2%

3.6%6.2%

FY16: Household financial asset distribution

Currency

Bank deposits

Non- banking deposits

Life insurance fund

Provident and pension fund

Claims on Government

Shares & debentures

change in financial assets

40%

58%

2%0%

10%

20%

30%

40%

50%

60%

Financial Savings Saving in physicalassets

Saving in the form ofgold & silver

ornaments

Share in household savings

2% 3% 3% 4% 4% 4% 5% 5%6%

7%8% 9% 9% 10%

12%

15%

19%

0%2%4%6%8%

10%12%14%16%18%20%

Swed

en SA

Braz

il

UK

Can

ada

Aus

tral

ia

Turk

ey

Kor

ea

Mex

ico

US

Sing

apor

e

Rus

sia

Chi

na

Switz

erla

nd

Indi

a

HK

Japa

n

Notes and coin in circulation outside banks as % of GDP85.2%

0%10%20%30%40%50%60%70%80%90%

F198

8

F199

0

F199

2

F199

4

F199

6

F199

8

F200

0

F200

2

F200

4

F200

6

F200

8

F201

0

F201

2

F201

4

F201

6

Share of Rs 500 and Rs1000 in currency in circulation

Rs1000 note was reintroduced in F2001 post 1978 demonetization

29

259

12078 83

4828 17 33

15 27

0

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100

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200

250

300

Chi

na

Rus

sian

Mex

ico

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a

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aysi

a

Braz

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Sout

h A

fric

a

Thai

land

Indo

nesi

a

Nig

eria

USDbn

10 12 1215

1821

25 2629 29 30

3437 38 41

48

05

101520253035404550

Japa

n

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na

Sing

apor

e

HK

Indo

nesi

a

Indi

a

SA

Kor

ea

Mex

ico

Turk

ey

Mal

aysi

a

Bang

lade

sh

Braz

il

Phili

ppin

es

Rus

sian

Thai

land

World bank: Shadow Economy as % of GDP (2007)

Black money statisticsIndia’s shadow economy estimated at 21% of GDP Sectors vulnerable to unaccounted income

Extent of direct tax evasion Top 10 economies: Illicit Financial Outflows

Includes all legal market based production that is deliberately concealed from the government

Illicit financials outflows consists of mis-invoicing of trade and leakage from BoP (source Global Financial Integrity)

25.1%

143%

0%

20%

40%

60%

80%

100%

120%

140%

160%

Personal income tax evasion as %of collected income tax

Corporate income tax evasion as% of collected income tax

F2010: Direct tax evasion (estimated by CBDT)

0 5 10

BPO sectorFinancial services

TradingManufacturing

Arts and Film IndustryCapital Markets

Bullion / commodity MarketProfessionals

Trusts, NGO and Charitable orgEducational Institutions

TobaccoMining

Realty sector

Sect

ors

vuln

erab

le to

una

ccou

nted

inco

me

Highly significant Marginally significantLeast significant

Source: Field survey of senior revenue officials (CBDT)

30

Electronic payments infrastructureIndia lags in cashless transactions Limited reach of ATMs machines

India has 13 bank branches per 100K adults India mobile subscription at 79 per 100 people

10.5 16.731.9

45.352.8

106.4

142.3

0

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160

India China Mexico SouthAfrica

Turkey Russia Brazil

2015: Per capita number of transactions with payment instruments

1840 49 50 55 59 66 77

98127 129 130

161 173 185222

291

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ore SA

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ssia

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ada

Ko

rea

2014: Automated teller machines (ATMs) (per 100,000 adults)

8 9 11 13 15 17 20 21 23 24 2529

32 3437

46 47

05

101520253035404550

Chi

na

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SA

Indi

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Mex

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Turk

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Can

ada

UK

Aus

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ia US

Japa

n

Rus

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Switz

erla

nd

Braz

il

2014: Commercial bank branches (per 100,000 adults)

79 82 85 93 96118 118 125 126 127 130 133 142 146

159 160

229

0

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250

Ind

ia

Can

ada

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rkey U

S

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2015: Mobile cellular subscriptions (per 100 people)

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YES BANK LimitedRegistered & Corporate Office: Nehru Centre, 9th Floor, Discovery of India, Worli, Mumbai 400018Tel: + 91 22 6669 9000; Fax: + 91 22 6669 9018

Northern Regional Corporate Office: 48 Nyaya Marg, Chanakyapuri, New Delhi 110 021Tel: + 91 11 5556 9000; Fax: +91 11 5168 0144

BUSINESS ECONOMICS BANKING

Contacts

Name Designation Email Phone

Shubhada M. Rao Chief Economist shubhada.rao@yesbank.in (+91) 22 3372 9198

Vivek Kumar Senior Economist vivek.kumar1@yesbank.in (+91) 22 3372 9059

Yuvika Oberoi Economist yuvika.oberoi@yesbank.in (+91) 11 6656 9087

Garima Kapoor Economist garima.kapoor@yesbank.in (+91) 22 3372 9030

Prakriti Shukla Economist prakriti.shukla@yesbank.in (+91) 22 3372 9016

Gaura Sengupta Economist gaura.sengupta@yesbank.in (+91) 22 3372 9792

Sanket Tandon Economist sanket.tandon@yesbank.in (+91) 22 3372 9793

Swati Arora Economist swati.arora1@yesbank.in (+91) 11 6656 9087

Note: Data in this report has been sourced from CEIC, Bloomberg, GoI Budget Documents & Economic Survey, CGA, Ministry of Petroleum & Natural Gas, IMD, RBI, IMF, and YES BANK Limited

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DisclaimerIn the preparation of the material or information contained in this document, YES Bank Limited (“YES Bank”) has used information that is publicly available, including information developed in-house. Information gathered and material used in this document is believed to have been obtained from reliable sources. However, YES Bank makes no warranty, representation or undertaking whether expressed or implied, nor does it assume any legal liability, whether direct or indirect or responsibility for the accuracy, completeness or usefulness of any information in this document.

The material or information in this document includes external data sources or references to third party, which are outside the realm or control of YES Bank. YES Bank takes no responsibility for the contents of those external data sources or such third party references. No third party will assume and direct or indirect liability, whose references have been provided in this document. It is the responsibility of the user or recipient of this document to make its/his/her own decisions or discretion about the accuracy, currency, reliability and correctness of information found in this document.

The opinion or expression made by YES Bank in this document, should not in any manner, be construed as a solicitation or endorsement of any offer for purchase or sale of any financial transaction, commodities, products of any financial instrument referred therein. All recipients of this document should carefully read, understand and investigate (either with or without professional advisors) into the risks arising out of or attached to such financial instrument or transaction or commodities or products before dealing or transacting in such financial instrument or transaction or commodities or products. All dealing or transaction entered upon by such recipients shall be entirely at their own risk and YES Bank shall not be responsible or liable for the same in any way whatsoever.

We have included statements, opinions, recommendations in this document which contain words or phrases such as "will", "expect" "should" and similar expressions or variations of such expressions, that is or may be construed as “forward looking statements”. Actual results may differ materially and substantially from those suggested by such forward looking statements. Such difference may arise due to various risks or uncertainties associated with our expectations with respect to, but not limited to, exposure to market risks, general economic and political conditions in India and other countries globally, which have an impact on our services and / or investments, the monetary and interest policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices, the performance of the financial markets in India and globally, changes in domestic and foreign laws, regulations and taxes and changes in competition in the industry. By their nature, certain market risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual future gains or losses could materially differ from those that have been estimated herein.

Neither YES Bank nor any of its officers, directors, personnel and employees shall be liable for any loss, damage of any nature, including but not limited to, direct, indirect, punitive, special, exemplary, consequential, as also any loss of profit in any way arising from the use of this material or the information therein, in any manner.

The investments discussed in this material may not be suitable for all investors. Any person subscribing to any product or financial instruments should do so on the basis of and after verifying the terms and conditions attached to such products or financial instruments, entirely at their own risk, costs and volition. Financial products and instruments are subject to market risks and yields may fluctuate depending on various factors affecting the capital or debt markets. Please note that past performance of financial products and instruments does not necessarily indicate the future prospects and performance thereof.

YES Bank or its officers, directors, personnel and employees, including persons involved in the preparation or issuance of this material may; (a) from time to time, have long or short positions in, and buy or sell the securities mentioned herein and/or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation in the financial instruments, products, commodities discussed herein or act as advisor or lender / borrower in respect of such securities, financial instruments, products, commodities or have other potential conflict of interest with respect to any recommendation and related information and opinions.

No part of this material may be duplicated or copied in whole or in part in any form and or redistributed without the prior written consent of YES Bank. Any reproduction, adaptation, distribution or dissemination of the information available in this document for commercial purpose or use is strictly prohibited unless prior written authorization is obtained from YES Bank.

This material is strictly confidential and privileged to the recipient. Use of the material is restricted to the recipient only. If you are not the intended recipient or if this document has been sent to you in error, please email us or return this document to the sender.

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About YES BANK

YES BANK, India’s fifth largest private sector Bank with a pan India presence across all 29 statesand 7 Union Territories of India, headquartered in the Lower Parel Innovation District (LPID) ofMumbai, is the outcome of the professional & entrepreneurial commitment of its Founder RanaKapoor and its top management team, to establish a high quality, customer centric, service driven,private Indian Bank catering to the future businesses of India.

YES BANK has adopted international best practices, the highest standards of service quality andoperational excellence, and offers comprehensive banking and financial solutions to all its valuedcustomers.

YES BANK has a knowledge driven approach to banking, and offers a superior customerexperience for its retail, corporate and emerging corporate banking clients. YES BANK is steadilyevolving as the Professionals’ Bank of India with the long term mission of “Building the BestQuality Bank of the World in India” by 2020.