RBI rescue plan for Yes Bank

SBI keen to acquire 49 pc stake in reconstructed bank

MUMBAI: In a move that demonstrates its resolve to save the capital-starved Yes Bank and its depositors & shareholders, the Reserve Bank of India (RBI) has sprung into action by announcing a reconstruction scheme on Friday for the bank that has gone under moratorium with a new board a day before.

As part of its reconstruction plan, the Reserve Bank has increased its   authorised capital multi-fold from Rs800 crore to Rs5000 crore whereas the number of the paid equity shares will be increased from the present Rs255 crore to Rs2400 crore with a face value of Rs2 each taking the paid-up capital to Rs4800 crore.

The scheme of things envisage an investor bank that will hold 49 per cent stake in the reconstructed bank with the investor bank acquiring the said stake for not less than Rs10 per share including  a premium of Rs8 apiece.

India’s biggest bank SBI has expressed its willingness to make investment in Yes Bank and participate in its reconstruction scheme, RBI said.

The RBI had invited suggestions and comments from members of public, including the banks’ shareholders, depositors and creditors on the draft scheme, the proposals for which have been placed on public domain.

The investor bank’s holding in the reconstructed bank will have a three-year lock-in period, and importantly, its holding cannot go down below 26 per cent.

State Bank of India that has already informed its intent to become the investor bank in turn can appoint two nominee directors on the board of Yes Bank’s new avatar.

RBI may also have representation on the reconstructed bank’s board. RBI in its statement has made it clear that no change has been made in the rights and liabilities of the reconstructed bank

The Additional Tier 1 capital of the bank that carries a big burden of bad loans will be written down completely and permanently. While the account holder won’t be entitled to receive any compensation from the reconstructed bank, RBI assured the employees that their service and remuneration will continue to remain the same.

The reconstructed bank can open new offices and branches or close down existing offices or branches, according to RBI. Finance Minister Nirmala Sitharaman on Friday said the government had asked the Reserve Bank to look into what went wrong at Yes Bank and fix individual responsibilities.

 

 

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