After the Yes Bank fiasco took India with a storm, the State Bank of India’s (SBI) proposal of investment might clear the bank out of trouble. Last week, Yes Bank was put under a moratorium for a period of 30 days by the Reserve Bank of India (RBI), as panic-stricken customers lined up outside bank outlets in search of proper insight.
The Reserve Bank of India (RBI) and the State Bank of India (SBI) have been working hard to work out a plan. And on Thursday, 12th March, the board of State Bank of India (SBI) approved the proposal of investing ₹7,250 Crore. The investment will be in accordance with purchasing 725 crore shares of Yes Bank. The condition set forth for the public sector SBI is purchasing shares not more than 49% of Yes Bank’s paid-up capital.
The amount invested by SBI is surely above the initial ₹2,450 Crore mentioned in the RBI draft plan, but lower than the ₹10,000 Crore announced by State Bank of India (SBI) chairman Ranjish Kumar.
The amount yet to be invested by SBI in helping private lender Yes Bank, might help SBI acquire a 49% stake of the troubled bank. Thus, it can also be stated, the total capital-raising to be not overtly more than ₹15,000 Crore. The capital could fluctuate though, in accordance with SBI’s stakes falling below 49%, and investor-private banks raising the stakes by 35%.
RBI has invested ₹5,000 Crore, adding into the private lenders authorized capital. Despite the ₹7,250 Crore investment yet to be done by SBI, Yes bank has a chance of raising an addition ₹10,000 Crore. Apart from that, on Friday, 4 more banks, ICICI Bank, HDFC Bank, Axis Bank, and Kotak Bank has announced financial support for their fellow private lender. ICICI and HDFC Banks have announced ₹1,000 Crore each, while Axis Bank and Kotak Bank will be investing ₹600 Crore and ₹500 Crore respectively.
Yes Bank will start afresh with a new Chairman, CEO, and board of directors, and ex-deputy MD of SBI, Prashant Kumar will be taking charge as the CEO of the private lender. As the Yes Bank Reconstruction Scheme 2020 is said to come in force from March 18, the moratorium placed on the private lender will be lifted on the same day. Yes Bank will start its new journey from 18th March 6:00 pm onward.