State Bank of India (SBI) Chairman Rajnish Kumar has said private lender YES Bank will not be allowed to fail and that some "solution" will emerge to straighten its financial condition. Kumar's remarks follow YES Bank's statement last week, wherein it junked reports on the lender's poor financials saying its liquidity and stability was comfortably above regulatory requirements.
"YES Bank is a significant player in the market with an almost $40 billion balance sheet. I have a feeling that it will not be allowed to fail," Kumar told Bloomberg on the sidelines of the World Economic Forum 2020 in Davos, Switzerland.
The private lender's shares have taken a beating in the past one year, plunging over 80 per cent, primarily after the sudden exit of promoter Rana Kapoor, asset quality deterioration, NPA divergences and lower capital levels. Divergence in YES Bank's total NPAs stood at Rs 2,299 crore for FY19. The bank is now aiming to infuse more capital to stay afloat.
The lender in its board meeting held on January 10 approved raising of funds of up to Rs 10,000 crore in one or more tranches through qualified institutional placement (QIP) or any other private placement of equity or debt. It has also scheduled an extraordinary general meeting of its shareholders on February 7 to discuss fundraising for Rs 10,000 crore and to authorise an expansion in its authorised capital to Rs 1,100 crore from Rs 800 crore earlier.
Meanwhile, YES Bank told the stock exchanges today that the lender sold 12,20,001 equity shares of nominal value of Rs 10 each, constituting 2.08 per cent of the paid-up share capital of SICAL Logistics Limited. This will change the bank's shareholding in SICAL by more than 2 per cent.
YES Bank share price recovered over 6.11 per cent on Thursday at Rs 40.80 after opening at Rs 38.55.
Edited by Manoj Sharma