The Union Cabinet on Friday approved reconstruction scheme for Yes Bank under which SBI will acquire 49% stake in the crisis-ridden private sector bank. Finance Minister Nirmala Sitharaman said the Union Cabinet has approved the reconstruction scheme for Yes Bank as suggested by the Reserve Bank.
On March 5, the RBI imposed a moratorium on Yes Bank, restricting withdrawals to Rs 50,000 per depositor till April 3. The RBI also superseded the board and placed it under an administrator, Prashant Kumar, former deputy managing director and CFO of SBI.
The reconstruction scheme will be notified as soon as possible, and on the third working day from when the scheme is notified, the moratorium will be lifted, the finance minister said.
“Within 7 days, a new board will be constituted wherein at least two directors from SBI will also become a part of the new board,” Nirmala Sitharaman said.
Giving details about the scheme, Sitharaman said SBI will invest for 49% equity in Yes Bank and other investors are also being invited. There will be a three year lock-in period for all the investors, she said. However, the lock-in period for SBI would be only for the 26% of the shareholding. The authorised capital of the lender has been increased to Rs 6,200 crore from Rs 1,100 crore, she added.
Sitharaman said the scheme has been approved with the objective of protecting the interest of depositors and providing stability to Yes Bank as well as to the entire financial system.
On Thursday, SBI said it will invest Rs 7,250 crore in Yes Bank, which is much higher than Rs 2,450 crore it had planned initially for a 49% stake in the private sector lender that began operations in 2004.
On Friday, ICICI Bank’s board approved an investment of up to Rs 1,000 crore in equity shares of Yes Bank, comprising up to 100 crore equity shares at Rs 10 per share. “This investment is likely to result in ICICI Bank Limited holding in excess of 5.0% shareholding in Yes Bank Limited,” ICICI Bank stated in a filing with the stock exchanges.
With inputs from PTI