"We are in the process of signing up with HDFC Ltd for distributing housing loans... It's a broad distribution alliance and is in the final stages," the bank's Founder, Managing Director and Chief Executive Rana Kapoor

Yes Bank competes directly with HDFC subsidiary HDFC Bank, a peer in the private sector banking space. For FY11, the bank's growth in non-interest income was a muted 8% to Rs 623.3 crore, compared to an impressive 58.2% rise in net interest income.

The talks with HDFC come right after a similar alliance was sealed with Dewan Housing Finance last week.

"We have signed an alliance with Dewan Housing for certain housing loans of a certain denomination," Kapoor said, adding that the bank is already engaging with potential partners in equipment loans and micro loans which are "not necessarily" microfinance.

Going ahead, Yes Bank will be looking for partners in the commercial vehicle financing space, he said.

Explaining the rationale behind the partnerships, Kapoor said, "We believe we are better off being a distributor rather than a manufacturer... We start creating more distribution revenue through our branches as we get a part of the income and a fee share."

Typically, under such tie-ups, the bank has a risk- sharing arrangement with the partner which can be either 50:50 or vary, Kapoor said, adding that loan processing is done by the partner.

At present, the bank has 225 branches and is targeting to open 125 more in FY12, Kapoor said, adding that about 100 of the new branches will be in tier-III to tier-VI areas where it does not need an approval from sectoral regulator Reserve Bank of India to open shop.

Apart from that, the seven-year-old bank is also targeting to open a wholesale banking branch in the Dubai International Finance Centre (DIFC) to help Indian corporate clients and a representative office in the United Arab Emirates to serve non-resident Indians, Kapoor said.