Yes Bank crisis: RBI unveils ‘Scheme of Reconstruction’; says SBI has shown interest in investing cash-strapped private lender

  • In a draft ‘Yes Bank Ltd. Reconstruction Scheme, 2020′, the RBI said the strategic investor bank will have to pick up 49 percent stake and it cannot reduce holding to below 26 percent before three years from the date of capital infusion

  • From the appointed date, the authorised capital of the private sector bank would stand altered to Rs 5,000 crore and number of equity shares to 2,400 crore having face value of Rs 2 each

  • It further said SBI has expressed its willingness to make investment in Yes Bank and participate in its reconstruction scheme

“The investor bank shall agree to invest in the equity of the Reconstructed bank to the extent that post infusion it holds 49 percent shareholding in the Reconstructed bank at a price not less than Rs 10 (Face value of Rs 2) and premium of Rs 8”

The draft comes a day after the RBI imposed a moratorium on the bank, restricting withdrawals to Rs 50,000 per depositor till 3 April.

The RBI also superseded the board of the bank, which is now being headed by former deputy managing director and CFO of SBI Prashant Kumar.

Meanwhile, Finance Minister Nirmala Sitharaman said the government has asked the Reserve Bank to look into what went wrong at Yes Bank and fix individual responsibilities.

Addressing a press conference here, she said the bank was being monitored since 2017 and developments relating to it were being monitored on a day-to-day basis.

She said the RBI has been asked to assess the causes of problems and identify the role played by individuals.

The government, she said, wants the RBI to ensure that due process of law is followed with a sense of urgency.

Earlier in the morning, RBI Governor Shaktikanta Das said Yes Bank resolution efforts are aimed at maintaining “stability and resilience” in the Indian financial sector and the difficulties will be overcome “very swiftly”.

The 30-day moratorium deadline is an “outer limit”, he said at a banking event in Mumbai, reiterating that the interest of depositors will be “fully protected”.
He also defended the timing of the move as “appropriate”, saying Yes Bank was unable to come up with a solution despite being given time for internal resolution.
Yes Bank has been struggling to raise capital. It sought to raise $2 billion initially during this fiscal, which was then pruned to $1.2 billion as it could not rope in any investor.
Also, the bank had deferred announcement of its financial results for the third quarter ended December. The bank had told stock exchanges that it will publish the same on or before 14 March, 2020.
Stock of Yes Bank plunged by over 80 percent during intra-day trade on BSE and closed 56.04 percent down at Rs 16.20.