Govt nod to reconstruction scheme for Yes Bank; moratorium to be lifted in 3 days after notification of revival plan

Union Finance Minister Nirmala Sitharaman said that the government gave its approval to the reconstruction scheme drawn by the Reserve Bank of India’s (RBI) for Yes Bank. Speaking to reporters in Delhi on Friday, Sitharaman said that within three days after the notification of the reconstruction scheme, the moratorium on Yes Bank will be lifted. “In the next seven days after the reconstruction scheme’s notification, a new board will be constituted at Yes Bank and at least two directors of State Bank of India will be part of the new board,” said the finance minister.

Cabinet Meet Outcome | Yes Bank moratorium to be lifted in 3 days after notification of scheme; the new board will have at least 2 board members from SBI: @nsitharaman pic.twitter.com/63Fxzqdayk

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Sitharaman said that State Bank of India (SBI) will invest 49 percent of equity in Yes Bank, with other investors also being invited. The SBI will have a lock-in of three years for up to only 26 percent of the 49 percent of its stake in Yes Bank. For the rest of the investors, the three-year lock-in will be applicable for 75 percent of their investment, Sitharaman said. The authorised capital itself of Yes Bank is being raised to Rs 6,200 crore from the current Rs 1,100 crore in order to accommodate immediate and subsequent capital raising requirement, she said. On 5 March this year, the RBI imposed a moratorium on Yes Bank, restricting withdrawals to Rs 50,000 per depositor till 3 April. The RBI superseded the board of Yes Bank, which has not been able to raise required capital for the last six months. It also appointed former Chief Financial Officer of SBI, Prashant Kumar as the administrator of Yes Bank. Later, Sitharaman had said the government asked the RBI to look into what went wrong at Yes Bank and fix individual responsibilities . she said the bank was being monitored since 2017 and developments relating to it were being monitored on a day-to-day basis. On Thursday, SBI announced a Rs 7,250-crore fund infusion into the crippled Yes Bank under which it will pick up to 49 percent equity in the fourth largest private sector lender. The fund infusion is part of the Reserve Bank-mandated rescue plan. SBI said its shareholding in Yes Bank will remain within 49 percent of the paid up capital of the private lender and following the fund infusion, it will pick up 725 crore shares. – With PTI inputs