According to the information made public by the entities, YES Bank
will see an investment of Rs 10,350 crore so far.
Ltd holds a stake in two other banks
— HDFC Bank (another systemically important bank) and Bandhan Bank.
Stock market investors Rakesh Jhunjhunwala, Radhakishan Damani, and the Azim Premji Trust have reportedly shown an interest in picking up stakes in YES Bank. According to an SBI executive, the second tranche of investment in YES Bank of around Rs 10,000 crore will take place within six months.
The Union Cabinet met on Friday to approve the ‘YES Bank Reconstruction Scheme, 2020’ and decided to raise the authorised capital of the ailing bank over five times from Rs 1,100 crore to Rs 6,200 crore.
“This was done to accommodate immediate and subsequent raising of capital requirements. State Bank of India
will invest up to 49 per cent of the equity in YES Bank,” Finance
Minister Nirmala Sitharaman said at a media briefing on Friday.
The plan was approved a day before YES Bank is expected to report its financial results for the third quarter of 2019-20.
There will be a lock-in of three years of a part of the investments made by these banks
in YES Bank. As much as 26 per cent of SBI’s equity investment and 75 per cent of the equity pumped in by other players will be retained in YES Bank for three years.
Amitabh Chaudhry, managing director and chief executive officer of Axis Bank, said: “The overall banking and financial system in India continues to remain resilient, even as the global economy is facing some challenges. Axis Bank strongly believes in the long-term prospects of the banking industry in India and we are happy to have an opportunity to contribute to the stability of the system.”
The restrictions put on YES Bank on lending and withdrawal activity will be lifted “on the third working day at 6 pm” after the notification comes out. The government was yet to make the notification public on Friday, at the time of going to press.
The RBI, which superseded the board of YES Bank by appointing an administrator on March 5, has imposed on it a moratorium under which each depositor is able to withdraw up to Rs 50,000. The bank isn’t allowed to do fresh lending either.
Former SBI chief financial officer Prashant Kumar was appointed administrator of the bank and will likely become chief executive officer of YES Bank after a new board is appointed “after seven calendar days from the cessation of the moratorium”.
minister refused to comment on the treatment of the additional tier-1 (AT-1) bonds in the final notification related to YES Bank, saying the matter was in court.
In the draft scheme, the RBI had decided to write down the AT-1 bonds of YES Bank.
The stock price of YES Bank went up by 2 per cent to Rs 25.55 on Friday.
(With inputs from Abhijit Lele).