The Reserve Bank of India (RBI) on Friday said that the country’s largest public-sector bank State Bank of India (SBI) has expressed its willingness to invest in the struggling private sector lender Yes Bank.
The central bank announced the draft ‘Yes Bank Ltd. Reconstruction Scheme, 2020′, in which it said that 49 per cent stake of Yes Bank will need to be picked up by a strategic investor bank which cannot be reduced below 26 per cent before three years from the date of capital infusion.
In a release, the RBI announced that the authorised capital of Yes Bank would stand altered to Rs 5,000 crore and the number of equity shares to 2,400 crore having face value of Rs 2 each.
“The investor bank shall agree to invest in the equity of the Reconstructed bank to the extent that post infusion it holds 49 per cent shareholding in the Reconstructed bank at a price not less than Rs 10 (Face value of Rs 2 and a premium of Rs 8),” the RBI draft read.
The shares of Yes Bank tanked 84.94 per cent on the BSE during the intraday trade on Friday, a day after the Reserve Bank of India (RBI) superseded the board of directors of troubled private sector lender for a period of 30 days “owing to serious deterioration in the financial position” of the bank and capped deposit withdrawals at Rs 50,000 per depositor. The announcement came post market hours on Thursday.
Earlier in the day, the scrip crashed as much as a whopping 84.94 per cent to hit its 52-week low of Rs 5.55 on the BSE. On the National Stock Exchange (NSE), it declined as much as 84.65 per cent to Rs 5.65, its 52-week low on the bourse.
However, the stock of the private sector lender recovered some of its day’s losses and settled 56.04 per cent lower at Rs 16.20 apiece on the BSE. On NSE it ended at Rs 16.60, down 54.89 per cent.
Update at 5:16 pm: RBI says: SBI has expressed willingness to invest in Yes Bank
Update at 5:14 pm: RBI says: The strategic investor bank cannot reduce its holding in Yes Bank below 26 per cent before 3 years.
Update at 5:12 pm: RBI says: Yes Bank’s capital stands altered at Rs 5,000 crore; strategic investor bank will bring in 49 per cent equity.
Update at 5:08 pm: RBI announces Scheme of Reconstruction for Yes Bank
Update at 5:06 pm: FM Sitharaman on Yes Bank issue: Some exposures to stressed corporates since before. Some of them are Anil Ambani group, DHFL group, Vodafone group
Update at 5:05 pm: FM Sitharaman on Yes Bank issue: Fines have been levied, regulatory actions were taken, the bank was also asked to raise capital
Update at 5:04 pm: FM Sitharaman on Yes Bank issue: Deposits and liabilities will continue unaffected as before.
Update at 5:02 pm: FM Sitharaman on Yes Bank issue: RBI has come out with a restructuring plan for Yes Bank
Update at 5:00 pm: FM Sitharaman on Yes Bank issue: I have asked RBI to assess the problems and clearly identify the problem created by individuals responsible for the problem
Update at 4:59 pm: FM Sitharaman on Yes Bank issue: I have asked RBI to act so that the due process of law takes its course with a sense of urgency
Update at 4:58 pm: FM Sitharaman on Yes Bank issue: In March 2019 and June 2019 fines were levied for non-compliance by the bank
Update at 4:55 pm: FM Sitharaman: A new CEO of the bank was appointed following this
Update at 4:52 pm: In September 2018, RBI clearly said the leadership had to change: FM Sitharaman
Update at 4:50 pm: FM Sitharaman on Yes Bank: Since 2017, RBI closely started monitoring Yes Bank, had noticed governance issues, weak compliance, wrong asset classification.
Update at 3:35 pm: Yes Bank shares settled 56.04 per cent lower at Rs 16.20 apiece on the BSE. On NSE it ended at Rs 16.60, down 54.89 per cent. In terms of trade volumes, over 10.63 crore shares of Yes Bank were traded on the BSE during the day while on NSE, over 126.47 crore shares exchanged hands on Friday.
Update at 3:03 pm: Finance Minister to brief media at 4:30 pm.
Update at 3:00 pm: Security at Yes Bank headquarters, its branches and ATMs across Mumbai was tightened to avert any untoward incident, as hundreds of account holders of the crisis-hit private lender rushed to withdraw money.
Update at 2.30 pm: Former Union finance minister P Chidambaram tweets data of Yes Bank’s loan book over the years. He claims it has increased under the supervision of the BJP. “Does the FM know the numbers that I have tweeted? If she does, will she please explain how the loan book jumped in five years from Rs 55,633 crore to Rs 2,41,499 crore?” he asks.
?? ??????? ???? ?? ????? ????? ???? ?? ??? ???? 10 ??????? ?? ?????? ???, ?? YES BANK ?? ?? ???????? ??? ???? 35 ??????? ?? ?????? ???? ????
— P. Chidambaram (@PChidambaram_IN) March 6, 2020
Update at 2:00 pm: Read our explainer on why the Indian markets have crashed today, and what to expect next from domestic factors.
Update at 1:42 pm: FM Sitharaman on Yes Bank issue: Immediate priority to ensure Yes Bank customers are able to withdraw money within Rs 50,000 cap.
Update at 1:42 pm: FM Sitharaman: RBI as a regulator is working for an early resolution to Yes Bank issue; steps taken in the interest of depositors, bank and economy.
Update at 1:42 pm: FM Sitharaman on Yes Bank crisis: Both RBI and government looking at Yes Bank issue in detail, we have taken a course which will be in everyone’s interest.
Update at 1:35 pm: FM Sitharaman on Yes Bank issue: RBI governor has assured me there will be no loss to any Yes Bank depositor.
Update at 1:35 pm: Finance Minister Nirmala Sitharaman on Yes bank crisis: I want to assure every depositor’s money is safe, and I’m in constant touch with RBI
Update at 12:52 pm: State Bank of India Chairman Rajnish Kumar says will come out with a restructuring plan For Yes Bank, news agency Reuters reported.
Update at 12:50 pm: Chief Economic Advisor Krishnamurthy Subramanian said all options are under consideration for restructuring Yes Bank and assured that depositors’ money is safe.
Update at 12:41 pm: “No Yes Bank,” Congress leader Rahul Gandhi said in a tweet hitting out at the BJP government over the moratorium placed on Yes Bank, and accused Prime Minister Narendra Modi of “destroying the Indian economy”.
No Yes Bank.
Modi and his ideas have destroyed India’s economy.
Update at 12:03 pm: “Let me assure you that our banking sector continues to be sound and safe,” RBI Governor Das said, adding that RBI was ready to effectively deal with the challenge ahead.
Update at 12:02 pm: Yes Bank has said Prashant Kumar, former deputy managing director and CFO of State Bank of India, has taken charge as its administrator.
Update at 11:46 am: The NSE put restrictions on Yes Bank shares in various segments, including futures and options.
Update at 11:40 am: RBI Governor says Yes Bank resolution will be done very swiftly; 30 days is outer limit
Update at 11:40 am: RBI Governor Das: You will see very swift action from RBI putting in place a scheme to revive Yes Bank.
Update at 11:39 am: Decision on Yes Bank taken at “larger level”, not at individual entity level; aimed at ensuring safety of financial system: RBI Governor Shaktikanta Das said.
Update at 11:18 am: Digital payments were impacted as PhonePe, which depends on the cash-strapped lender for its transactions, could not operate.
Update at 11:16 am: Asset management companies have asked their clients, who have bank accounts with the troubled lender, to furnish details of alternate accounts for receiving redemption payouts. Redemption is the return of an investor’s principal on a fixed income security such as a bond, mutual fund or preferred stock.
Update at 10:25 am: The RBI’s moratorium and withdrawal cap on Yes Bank is credit negative, and the lack of coordinated action highlights continued uncertainty around bank resolutions, Moody’s Investors Service has said.
In a press release on Thursday, the RBI said: “This has been done to quickly restore depositors’ confidence in the bank, including by putting in place a scheme for reconstruction or amalgamation.” The central bank has appointed Prashant Kumar, former Deputy Managing Director and CFO of State Bank of India, as the administrator of the struggling private sector lender.
As per the latest move, Yes Bank will not be able to grant or renew any loan or advance, make any investment, incur any liability or agree to disburse any payment.
The regulatory actions undertaken by the RBI and the government, came in hours after news agency Bloomberg reported that a State Bank of India (SBI)-led consortium was directed to bail out the troubled lender.
(with PTI inputs)