YES Bank's Reconstruction Scheme: The story so far

Finance Minister Nirmala Sitharaman on Friday said that the Union Cabinet has approved the reconstruction scheme for Yes Bank as proposed by the Reserve Bank of India and the moratorium will be lifted within three days after the notification is issued.

Hours after the Cabinet approved restructuring scheme for YES Bank, private lenders ICICI Bank,  HDFC, Kotak Mahindra Bank and Axis Bank came to the cash-strapped bank's rescue. 

ICICI Bank said its board has approved investing Rs 1,000 crore in Yes Bank. "This investment is likely to result in ICICI Bank Ltd holding in excess of 5 per cent shareholding in Yes Bank," the lender said in a regulatory filing.

 HDFC is set to invest Rs 1000 crore.

Axis Bank will pour Rs 600 crore to pick up 60 crore shares of YES Bank. The Axis bank in its regulatory filing said, "The board has approved to  invest a  sum of  up  to  Rs  600 crore for acquiring up to  60  crore equity shares of  Rs 2 each of  Yes Bank Limited, for cash, at a premium of  Rs 8 per equity share."

And Kotak Mahindra Bank infusing an equity capital of Rs 500 crore under the RBI's bailout plan.

As part of the YES Bank restructuring plan, Life Insurance Corporation of India (LIC) would buy around 1.35 billion shares at a price of Rs 10 apiece, according to TV report.
 

State Bank of India yesterday said it would infuse Rs 7,250 crore into ailing YES Bank to pick up to 49 per cent equity as part of the Reserve Bank of India-mandated bailout plan. 

The developments of other investors came hours after Finance Minister Nirmala Sitharaman said that other investors are also being invited.There will be a three year lock-in period for all the investors, Sitharaman said. However, the lock-in period for SBI would be only for the 26 per cent of the shareholding.

The authorised capital of the lender has been increased to Rs 6,200 crore from Rs 1,100 crore, the finance minister said, adding that the scheme has been approved with the objective of protecting the interest of depositors and providing stability to Yes Bank as well as to the entire financial system.The finance minister further added, "a new board will be constituted and two directors from SBI will be made its members. Seven days after the notification to lift the moratorium the Administrator will vacate his office."

SBI cannot reduce its holding below 26 per cent for the next three years. The SBI investment of Rs 7,250 crore is much higher than the Rs 2,450 crore it had planned initially for 49 per cent stake in the private sector lender. 
 

On March 5, the RBI had imposed a moratorium on the country's fifth-largest private-sector lender, restricting withdrawals to Rs 50,000 per depositor till April 3 following a serious deterioration in the bank's financial position. The central bank had also superseded the board and placed it under an administrator, Prashant Kumar, who is a former deputy managing director and chief financial officer of SBI.

The private sector lender is scheduled to announce its results for the third quarter ended December 2019 (Q3FY20) on Saturday, March 14. 

YES Bank is banking on investment by SBI, speedy resolution with support from the RBI and SBI, and fundraising plans to instil confidence among customers, according to administrator. Today, shares of YES Bank closed 2 per cent higher at Rs 25.55 per share against around 4 per cent rise in the S&P BSE Sensex. The stock has surged a mammoth 424 per cent from Friday’s low of Rs 5.65

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