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Tuesday, August 04, 2020

Yes Bank gets new board; Bandhan Bank, Federal Bank to invest Rs 300 crore each

According to the scheme approved by the government, the office of the Administrator of the reconstructed bank, appointed by the RBI, “will stand vacated immediately after seven calendar days from the date of cessation of moratorium”.

By: ENS Economic Bureau | Mumbai, New Delhi | Updated: March 15, 2020 7:36:34 am
Pedastrian walk past a Yes Bank Ltd. branch in Mumbai, India, on Tuesday, April 30, 2019. Photographer: Dhiraj Singh/Bloomberg

The government has notified the new board of Yes Bank with Sunil Mehta, former PNB non-executive chairman, as non-executive chairman and Mahesh Krishnamurthy and Atul Bheda as non-executive directors under the reconstruction scheme. In addition to State Bank of India and four private lenders, which have committed capital infusion, two more private banks — Bandhan Bank and Federal Bank — announced they would be investing Rs 300 crore each in the stressed private lender, taking the total equity investment to Rs 10,950 crore.

It has also notified that Prashant Kumar, former CFO and deputy managing director of State Bank of India and currently the Administrator of Yes Bank, will be the new MD and CEO of the bank under the scheme.

According to the scheme approved by the government, the office of the Administrator of the reconstructed bank, appointed by the RBI, “will stand vacated immediately after seven calendar days from the date of cessation of moratorium”. The moratorium on Yes Bank will be lifted by March 18. The investor bank will nominate two officers as directors in addition to the members approved by the government. “The RBI may appoint one or more persons as additional directors as it may consider necessary. Any investor who is permitted to have voting right of 15 per cent will have the right to nominate one director on the board,” says a gazette notification.

The reconstruction scheme says that an investor, other than the investor bank (SBI), may exercise voting rights to the extent of its shareholding or nine per cent of the total voting rights of all the shareholders of reconstructed bank or as may be decided by the RBI, whichever is lower.

It says the investor bank and investors who have subscribed to the shares of the reconstructed bank under the scheme will not be liable to pay capital gains tax for any deemed profits or gains on account of such subscriptions. “All the deposits with and liabilities of the reconstructed bank, except as provided in the scheme, and the rights, liabilities and obligations of its creditors, will continue in the same manner and with the same terms and conditions,” the scheme says.

“All employees of the reconstructed bank will continue to be employees of the reconstructed bank with the same remuneration and on the same terms and conditions of service, including terms of determination of service and retirement, as were applicable to such employees immediately before the commencement of this scheme, for a minimum period of one year,” it says.

ICICI Bank, HDFC, Axis Bank and Kotak Mahindra Bank on Friday said they will join the SBI-led consortium and invest in Yes Bank. ICIC Bank and HDFC will invest Rs 1,000 crore each, Axis Bank will invest Rs 600 crore, and Kotak Mahindra Bank Rs 500 crore. On Thursday, SBI said it will invest Rs 7,250 crore in Yes Bank, which is much higher than the Rs 2,450 crore it had planned initially for a 49 per cent stake in the private sector lender.

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