ICICI, HDFC & Axis join SBI to invest in Yes Bank
■ HDFC, ICICI Bank, Axis, Kotak Mahindra to buy stake
Depositors of beleaguered Yes Bank have a reason to cheer: The Reserve Bank of India may withdraw curbs on cash withdrawal within three working days of the Central bank notifying the rescue plan, which got the Union Cabinet’s approval on Friday.
The government said six financial institutions — mostly private lenders— have teamed up with state-owned SBI to rescue the lender. They would infuse `11,750 crore capital into Yes Bank.
ICICI Bank and HDFC Ltd will own 6 per cent each at an investment of `1,000 crore each, Axis Bank 4.70 per cent at `600 crore and Kotak Mahindra Bank 3.4 per cent at `500 crore. Apart from private banks, investors like Radhakishan Damani, Rakesh Jhunjhunwala and Azim Premji Trust will own three per cent each at an investment of `500 crore each, a source close to the development said.
Depositors of beleaguered Yes Bank have a reason to cheer: The RBI may withdraw curbs on cash withdrawal within three working days of the central bank notifying the rescue plan, which got the Union Cabinet's approval on Friday.
The government said six financial institutions mostly private lenders have teamed up with stateowned SBI to rescue the lender. They would infuse Rs 11,750 crore capital into Yes Bank.
ICICI Bank and HDFC Ltd will own 6 per cent each at an investment of Rs 1,000 crore each, Axis Bank 4.70 per cent at Rs 600 crore and Kotak Mahindra Bank 3.4 per cent at Rs 500 crore. Apart from private banks, investors like Radhakishan Damani, Rakesh Jhunjhunwala and Azim Premji Trust will own three per cent each at an investment of Rs 500 crore each, a source close to the development said.
SBI recommended appointing administrator Prashant Kumar as the new CEO of Yes Bank. "The state-owned lender also detailed how much capital each investor will bring and by when the plan will be executed. As per the proposal, public-sector banks will bring in Rs 30,000 crore as bulk deposits," the source said.
The announcement of these investment comes alongside the approval of Yes Bank's restructuring scheme by the Union Cabinet on Friday. After the Cabinet meeting, Finance Minister Nirmala Sitharaman said, "Soon after the notification of the scheme, within three (working) days the moratorium will be lifted, and within seven days a new board will be constituted therein."
Sitharaman further said, "The decision keeps at its core the aim to safeguard depositors' interest and ensure a stable financial banking system. The authorised capital of Yes Bank is being raised to Rs 6,200 crore from Rs 1,100 crore in order to accommodate immediate and subsequent capital raising requirement."
Sitharaman also said SBI will invest up to 49 per cent of the equity in Yes Bank.
On the new board of Yes Bank, she also said, "The administrator will vacate the office within seven days of notification and new board will take charge.
Explaining the mode of investment, she said there would be a three-year lockin period for all the investors. "However, the lock-in period for SBI would be only for 26 per cent of shareholding. It would be 75 per cent in case of other investors," she added.
As per RBI's draft reconstruction scheme for the bank, its authorised capital was to be Rs 5,000 crore. On Thursday, the SBI said it would invest Rs 7,250 crore in Yes Bank, which is much higher than Rs 2,450 crore it had planned initially for 49 per cent stake in the private sector lender that began operations in 2004. In a stock exchange filing, all these private banks said, the decision on the investment was taken at their respective board meetings held on Thursday.