SBI to Acquire Up to 49% Stake in Crisis-Hit Yes Bank, Says Chairman Rajnish Kumar
According to a tweet by ANI, Rajnish Kumar, SBI Chairman said that a plan has been received by SBI and the legal team is working on the plan. "We had informed through the stock exchange that SBI board has given in-principle approval of exploring possibility of picking up a stake of upto 49% in YesBank", he said.
New Delhi, March 7: The State Bank of India (SBI) has come to the rescue of crisis-hit YES Bank and said it is mulling to pick up a 49 per cent stake in troubled private lender. The decision has been taken as part of a revival scheme framed by the Reserve Bank of India (RBI) on Friday. The draft plan came a day after the banking regulator superseded Yes Bank board and appointed an administrator.
According to a tweet by ANI, Rajnish Kumar, SBI Chairman said that a plan has been received by SBI and the legal team is working on the plan. "We had informed through the stock exchange that SBI board has given in-principle approval of exploring possibility of picking up a stake of upto 49% in YesBank", he said. YES Bank Crisis: Reserve Bank Caps Withdrawals at Rs 50,000, Appoints Former SBI Chief Financial Officer as Administrator.
Here's the tweet:
On Friday, the SBI had shown interest in investing in troubled private sector lender Yes Bank. It said it could hold upto 49 per cent stake in the bank, as per a scheme of reconstruction proposed by the RBI. The SBI Chairman added saying that the total quantum of investment in Yes Bank is at Rs 2,450 crore. He assured all the depositors that their money is not at risk.
Here's What RBI's Draft Plan States
The RBI's draft plan states that Yes Bank's new share capital will be Rs 5,000 crore with 2,450 crore equity shares of Rs 2 each. The draft scheme provides for appointment of two nominee directors by the investor on the Board of the Reconstructed Bank. "Reserve Bank of India may appoint Additional Directors in exercise of the powers conferred by sub-section (1) of Section 36AB of the Banking Regulation Act, 1949," the RBI plan said.
According to the plan placed in the public domain for comments, the investor bank would be required to invest in the equity of reconstructed Yes Bank to the extent that post infusion it holds 49 per cent shareholding in the bank at a price not less than Rs 10 (face value of Rs 2) and premium of Rs 8.
What After SBI Picks Up 49% Stake in YES Bank
This means that the SBI will need to pay about Rs 11,760 crore for taking 49 per cent stake in the restructured Yes Bank. The RBI has said that the investor bank shall not reduce its holding below 26 per cent before completion of three years from the date of infusion of the capital.
Yes Bank Employees To Work Under the Same Salary
Yes Bank employees will continue to work under the same remuneration and on the same terms and conditions of services as before for at least a period of one year. As per reports, the Board of Directors of the reconstructed bank will, however, have the freedom to discontinue the services of the key managerial personnel (KMPs) at any point of time after following the due procedure.
On Friday, the Enforcement Directorate (ED) filed a money laundering case and carried out searches at the residence of the YES bank's founder Rana Kapoor. The ED also issued a look out circular against Kapoor, so that he does not leaves the country. Yes Bank has over 1,000 branches and 1,800-plus ATMs across the country which are under severe stress after the crisis erupted last night.
(The above story first appeared on LatestLY on Mar 07, 2020 10:54 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).