Govt okays Yes’ restructuring plan
NEW DELHI/MUMBAI: The Union cabinet, headed by Prime Minister Narendra Modi, on Friday approved the Yes Bank rescue plan backed by the State Bank of India (SBI).
“The notification with details of the reconstruction plan will be released as soon as possible,” finance minister Nirmala Sitharaman said, adding that the moratorium that was imposed on March 5 will be lifted within three working days after the scheme is notified.
Thereafter, a new board, including two directors from SBI, will be set up within seven days. The Reserve Bank of India (RBI)-appointed administrator, former SBI chief financial officer Prashant Kumar, will vacate the office seven days after the moratorium is lifted, Sitharaman said at a media briefing.
The finance minister said that SBI will invest up to 49% of equity in Yes Bank as part of the
RBI-supervised ‘Yes Bank Ltd Reconstruction Scheme, 2020’. On Thursday, SBI informed the exchanges that its board had approved a proposal to invest ₹7,250 crore in Yes Bank by purchasing 7,250 million shares at ₹10 apiece. Mint has reviewed a copy of the proposal, though the contours of the final cabinet approval are not yet known.
According to the proposal, HDFC Bank and ICICI Bank will infuse ₹1,000 crore each, Axis Bank ₹600 crore and Kotak Mahindra Bank (KMB) Ltd ₹500 crore into Yes Bank. The quantum of investment to be made by Life Insurance Corp. of India (LIC) is awaiting the board’s approval, according to a person with knowledge of the development.
Under the new proposed shareholding structure, SBI may hold a 45.74% stake, HDFC Bank and ICICI Bank may hold 6.31% each, and Axis Bank and KMB may hold around 3.5% each. The additional tier 1 (AT1) bondholders may hold 10.73% and existing shareholders may hold 14.79%. Despite the infusion, Yes Bank will continue to be a private sector bank, said two other people aware of the matter.
The boards of HDFC Bank, ICICI Bank, KMB and Axis Bank have approved the investments.
Sitharaman also said that other investors will be subject to a three-year lock in period for 75% of their investment, while for SBI the investment lock-in is unchanged at 26%, as announced in the draft scheme.
The lock-in tenure for SBI and other investors remains three years, according to the reconstruction scheme.