Union Cabinet has approved the reconstruction scheme for Yes Bank proposed by the Reserve Bank of India. Talking to the media, Finance Minister Nirmala Sitharaman stated that the RBI's moratorium on the beleaguered private lender will be lifted three days after the revival plan is notified. She assured that the revival scheme will be notified "as soon as possible".
"The notification shall come out, and the moratorium shall cease on the third working day at 1800 hours from the date of the notification. Office of the administrator shall stand vacated after seven calendar days from the cessation of the moratorium and a new board shall be constituted," said the Finance Minister.
The new Yes Bank board, comprising of new CEO and Chairman, will also have at least two directors from the State Bank of India (SBI), which has promised to acquire 49 per cent stake in the private sector bank, she further said.
ALSO READ: Cabinet briefing LIVE updates: Cabinet approves RBI's revival plan for Yes Bank
"State Bank of India will invest up to 49 per cent of the equity. Other investors are also being invited and quite a lot of engagement by the RBI is happening to bring in other investors. There will be a three-year lock-in period for SBI for up to only 26 per cent of the 49 per cent that they are investing. For the rest of the investors, it will be lock-in for three years of 75 per cent of their investment," Sitharaman said.
"The authorised capital itself has been raised from Rs 1,100 crore to Rs 6,200 crore, so that we can accommodate immediate and subsequent raising of capital requirements," Sitharaman further said.
On Thursday, SBI announced plans to pump in Rs 7,250 crore in Yes Bank by purchasing 725 crore shares at Rs 10 per share. The leading public sector lender has assured that its investment will adhere to the 49 per cent limit laid down in RBI's reconstruction scheme for Yes Bank. On Friday, ICICI Bank also revealed plans to invest Rs 1,000 crore in Yes Bank.
ALSO READ: 7th Pay Commission: Modi cabinet raises DA by 4% for central govt employees
Sitharaman clarified that Cabinet did not discuss investment by Life Corporation of India in Yes Bank. On AT-1 bonds of Yes Bank, Sitharaman said that she will not be able to comment on the matter as it is sub-judice.
On March 5, Yes Bank was put under moratorium by the RBI till April 3 due to deteriorating financial position, governance issues, false assurance on raising funds, non-serious investors, and outflow of liquidity. The government has limited withdrawals to Rs 50,000 for a month, superseded YES Bank board and appointed Prashant Kumar, former Deputy Managing Director and CFO of State Bank of India (SBI), as administrator.
On March 6, RBI had tabled the draft reconstruction scheme for reviving Yes Bank, where SBI had consented to willingness to invest in the troubled private bank.
ALSO READ: After SBI, ICICI Bank to pump in Rs 1,000 crore in YES Bank
Copyright©2023 Living Media India Limited. For reprint rights: Syndications Today
