Three banks reduce shareholdings in Yes Bank within 15 days of reconstitution by RBI

In a major development, with the release of shareholdings of the reconstituted Yes Bank on Wednesday evening, reports stated that three banks - namely Kotak Mahindra Bank, Federal Bank, and IDFC First Bank have reduced their stake in Yes Bank between March 17 and March 31. As per the Bombay Stock Exchange (BSE) website Kotak-Mahindra now holds 3.61% (45.27 crore shares), Federal bank holds 1.92% (24.13 crore shares) and IDFC bank holds 1.67% (20.92 crore shares). Currently, the biggest stakeholder - State Bank of India (SBI), has kept its stake undiluted at 48.21%, while other banks HDFC, ICICI Bank, Bandhan Bank, and Axis Bank have maintained their shares.

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3 banks sell off shares in Yes Bank

Reports state that Federal Bank Ltd and IDFC First Bank Ltd have sold off almost 78% and 64% of their shares which they have been allowed to sell as per RBI guidelines. Meanwhile, Kotak-Mahindra bank sold off almost 37.8% of their allowed sellable shares. Experts state that the sale of these shares has allowed these three lenders to reportedly recover most of their investment into the stressed lender -Yes Bank. This stake has mainly been picked up by individual shareholders, state reports. As per RBI guidelines, lenders have a lock-in period of three years where they are not permitted to sell over 75% of their holdings in Yes Bank.

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What is the Yes Bank crisis?

Yes Bank started 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, among others. Moreover, when RBI refused to extend the term of founder Rana Kapoor as chief executive in 2018, its management was severely hit with his successor Ravneet Gill managing to raise only one round of funds through a share sale to institutional investors. In a bid to revive the bank, Gill has been in talks over the past 18 months with equity investors but could not come up with a concrete investment plan.  

Yes Bank Board of Directors reconstituted; administrator Prashant Kumar named as MD & CEO

RBI appointed former SBI CFO Prashant Kumar as administrator for commercial bank - Yes Bank and imposed a moratorium on the troubled lender capping its withdrawals at Rs 50,000, for a period of 30 days. Meanwhile, the government has asked SBI and LIC to bail out the private lender which has stressed assets of Rs  45,000-50,000 crore in its 1122 branches, by forming a consortium of banks and picking up a stake - 24.5 percent stake each. The bank was reconstituted under the  ‘Yes Bank Ltd. Reconstruction Scheme, 2020’ on March 17, altering the authorised capital to Rs 5000 crores and 2400 equity shares standing at Rs 2 each. 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.

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