CBI steps in to probe YES Bank, SBI details its plan
NEW DELHI: State Bank of India (SBI) on Saturday set a cap of ₹10,000 crore on investment in beleaguered YES Bank Limited, including an immediate infusion of ₹2,450 crore, and reassured depositors in the latter that their money was “absolutely” safe, as investigators questioned co-founder Rana Kapoor and probed questionable loans extended by the private lender.
If SBI, the country’s largest commercial bank, becomes the sole investor in YES Bank and picks up a 49%t stake, the immediate outgo would be ₹2,450 crore, chairman Rajnish Kumar said. SBI will not seek capital from the government to fund the rescue and may instead work with other investors, Kumar told reporters. Many potential co-investors have approached SBI to be part of the deal, he said.
“Our investment is an assurance to depositors and our co-investors,” Kumar said. “We are in a comfortable position to inject funds into the bank.”
He added that he had set an investment “boundary” of ₹10,000 crore for the bailout,based on an assumption of higher capital requirements in the future and to keep YES Bank operational.
He stressed that it wasn’t a merger and SBI wouldn’t be involved in YES Bank’s day-today operations.
On Friday evening, a day after it clamped a moratorium on YES Bank, limiting withdrawals to ₹50,000, the Reserve Bank of India (RBI) unveiled a rescue plan under which a strategic investor would acquire a 48% stake in the lender and will not reduce it to below 26% before three years from the date of infusing the funds.
YES Bank plunged into trouble after failing to raise money, around $2-2.5 billion, that it needs.Kumar said that SBI, being the country’s largest bank, had to try and prevent an important lender from going down. “You need a credible name with the investors to save a bank,” he said. “SBI is a credible institution with size.”
Kumar said SBI had received the RBI’s draft scheme of reconstruction for YES Bank and its investment and legal teams were carrying out a due diligence on the draft.
“Once we complete our due diligence, we will go back to the RBI with our comments,” he said. Monday, March 9, is the deadline for a potential investor to submit its feedback to the central bank. Kumar said the investment in YES Bank wouldn’t be against SBI’s shareholders’ interests, ruled out any conflict of interest and assured depositors in the troubled bank that their money was “absolutely not at risk.”