SBI to invest $977 million in Yes Bank

BENGALURU/NEW DELHI: The State Bank of India (SBI) said yesterday that it would invest 72.50 billion rupees ($977 million) for an initial stake in Yes Bank as part of a rescue deal for the troubled lender.

The approval comes days after India placed its fifth-largest private sector lender under a moratorium following a serious deterioration in the lender’s financial position.

The rescue plan for Yes Bank involves SBI, the country’s largest lender, buying a stake in the troubled lender, with the

Reserve Bank of India (RBI) last week increasing the bank’s authorised share capital to make way for a cash injection.

Last week, SBI said it would need to invest 24.5 billion rupees if it had to buy a 49% stake in the lender.

SBI said yesterday that its stake in Yes Bank would remain within 49% but did not offer further details.

Yes Bank did not immediately respond to a request for comment.

Yes Bank, weighed down by an increasing pile of bad debt, has struggled for months to raise the capital it needs to stay above regulatory requirements, without any success.

Separately yesterday, IndusInd Bank cancelled plans to raise debt through a sale of bonds, citing current market conditions.

“In view of current market conditions and since the bank is adequately capitalised at present, it has been decided not to consider raising of Basel III-compliant debt capital instruments for the time being,” the seventh mostvalued bank in India said.