After submitting an 'expression of interest' in acquiring upto 49% stake in Yes Bank, SBI chairman Rajnish Kumar addressed a press conference assuring the state-run bank's commitment to invest in the stressed commercial lender. While Kumar did assure that SBI depositors will not be affected by the investment, he expressed that SBI would prefer holding its mandatory 26% stake investment and look for other co-investors for the remaining stake. Moreover, when asked if the recent ED raids on Yes Bank founder and former MD Rana Kapoor's residence will affect the brand image of the bank, Kumar said that the 'individual will pay for his wrongs, but the entity must not suffer'.
"We have to clearly distinguish between the person and the enterprise. I doubt whether this will have any negative impact. Yes Bank is an entity and Rana Kapoor is an individual. If an individual has done something wrong, they will pay price for that. But why should the enterprise suffer?" he said.
Talking about SBI's potential investment, he said that while the bank may not pick the entire 49%, it will invest a minimum of 26% state - attune to Rs 5200 crores. When asked about who will be his co-investors, he revealed that several companies have expressed interest in investing in Yes Bank. He added that while SBI's plan for investment in being finalised by its own legal department which will be presented to RBI on Monday, he assured that the bank will work 24x7 to revive the bank within the stipulated moratorium date - pumping an initial investment of Rs. 2450 crores
When asked about why SBI was always rushing to help stressed lenders or companies in financial trouble, he said, "SBI has a role to play in maintaining the health of the bank sector. Any bank failure - small or large will affect the fate of the employees. While we tried our level best to revive Jet airways, I have been informed that the employees of Yes Bank are competent and under the right management, the bank should function smoothly".
Ruling out any merger between SBI and Yes Bank, he said that SBI will not have any conflict of interest with respect to the two banks. Clarifying that it was not SBI's philosophy to poach any other entity's clients, he said that SBI will not be involved in Yes Bank's day-to-day activities. Furthermore, he added that SBI will suggest two nominee directors to the board and also will suggest names to the newly constituted board for the post of CEO and MD adding that the MD will not be from SBI.
Kumar explained the obligations that are a part of the draft scheme. He declared that the SBI would make an initial investment of Rs.2,450 crore in Yes Bank, picking 2400 equity shares standing at Rs 2 each with a premium of Rs 8 each. Stating that it was RBI's call to decide when the moratorium will be lifted, he said that depositors of Yes Bank need not worry as SBI will ensure a smooth transition.
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 raiding founder Rana Kapoor's residence after booking a money laundering case. 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.