EQUITY NOT SPARED EITHER, SEES ~3,300-CRORE EROSION

Minority shareholders may see further dilution of 30% following the RBI’S draft reconstruction scheme

Retail investors are seeing a hit of more than ~3,346 crore on their investments in YES Bank. In the December quarter, they were cumulatively the largest shareholder in the private lender with a 43 per cent stake.

According to the draft reconstruction scheme laid down by the Reserve Bank of India (RBI), minority shareholders can see over 30 per cent dilution. The new investor in the bank, under this scheme, can acquire a 49 per cent stake at a minimum of ~10 per share.

On Friday, the company's share price closed at ~16.20 per share on the BSE, following a 56 per cent drop.

At the end of December quarter, the number of retail shareholders in YES Bank stood at 1.6 million, an increase of 270,000 over the previous quarter. In the September quarter, retail investors’ stake in the bank stood at 27 per cent. According to market participants, with YES Bank being a low-priced stock (with the last six-month average price of ~49.3), retail investors were lured into it and grabbed large quantities, betting on the possibility of a revival in the bank.

LIC, the domestic insurance giant, so far, has seen mark-to-market erosion of ~632 crore in its equity exposure to the bank.

Among other investor categories, the mark-to-market impact on FII investments in YES Bank was ~1,189 crore. At the end of the December quarter, the share price of the private lender stood at ~46.95 per share. Since then, the stock is down 65 per cent. For MFS, the mark-to-market hit on their equity exposure has been ~399 crore.

In the past, too, according to brokerages, there have been cases where retail investors increased their stake in debt-troubled companies as they turned into penny stocks.