Cabinet approves Yes Bank reconstruction scheme; moratorium to end 3 days post-notifying

In a massive reprieve to Yes Bank depositors and the stressed lender, the Union Cabinet on Friday has approved the reconstruction scheme for Yes Bank as proposed by RBI, informed Finance Minister Nirmala Sitharaman in a press conference. She added that the moratorium placed on the commercial bank will be lifted within three days once the reconstruction scheme is notified. SBI is set to invest up to 49% equity in Yes Bank, while other investors too have been sought out by the bank.

SBI to buy 725 crore shares of Yes Bank at Rs.10 each; shareholding to remain up to 49%

Cabinet approves reconstruction scheme

"Moratorium on Yes Bank to be lifted within 3 days of notification of the reconstruction scheme and board to be in place in 7 days. SBI to invest up to 49% equity in Yes Bank; other investors being sought. SBI to have 3-yr lock-in period for 26% of its equity in Yes Bank and other investors to have similar lock-in for 75% of equity," she said adding "ICICI Bank is set to invest Rs 1,000 cr equity in Yes Bank and will hold a stake in excess of 5%".

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SBI share-purchase approved

Earlier on Thursday, State Bank of India declared that it would purchase 725 crore shares of Yes Bank at Rs. 10 per share subject to regulatory approvals. Apart from SBI, six other lenders including ICICI Bank, HDFC Bank, Axis Bank, Kotak Mahindra Bank and individuals like Radhakrishna Damani, Rakesh Jhunjhunwala and Azim Premji Trust have joined SBI in investing in Yes Bank, as per reports. The total equity reportedly exceeds Rs 12,000 crores, as per reports.

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Yes Bank crisis

Yes Bank which has been facing a crisis as it accumulated many bad loans in 2018 by lending to corporate defaulters such as DHFL, Jet Airways and Cafe Coffee day, was put on a moratorium by RBI for a period of 30 days, capping its withdrawals at Rs 50,000. The RBI has also announced ‘Yes Bank Ltd. Reconstruction Scheme, 2020’ altering the authorised capital to Rs 5000 crores and 2400 equity shares standing at Rs 10 each. Moreover, SBI which leads the consortium of banks investing in the 'reconstructed bank' will not reduce its holding below 26% before the completion of three years.

Currently, Enforcement Directorate is investigating into Yes Bank founder Rana Kapoor - who was kept under judicial custody till March 11. The ED is probing into the loans offered by Yes Bank to DHFL which has been booked for siphoning funds close to Rs 13000 crores allegedly through 80 shell companies. The CBI too has booked a case against Kapoor for the same offence.

SBI to pick up 49% stake in crisis-ridden Yes Bank; initial investment will be Rs.2,450 cr