Cabinet approves reconstruction scheme for crisis-hit Yes Bank
The scheme has been approved with the objective of protecting depositors' interest and providing stability to Yes Bank as well as to the entire financial system, she added.
New Delhi: The Union Cabinet on Friday approved reconstruction scheme for private sector lender Yes Bank as proposed by the Reserve Bank of India (RBI) and the moratorium will be lifted within three days after the notification is issued.
Finance Minister Nirmala Sitharaman said State Bank of India (SBI) will invest for 49 per cent equity in Yes Bank and other investors are also being invited.
“There will be a three year lock-in period for all investors. However, the lock-in period for SBI would be only for the 26 per cent of the shareholding,” she told reporters after the Cabinet meeting.
Finance Minister Nirmala Sitharaman on Yes Bank reconstruction: The moratorium will be lifted within 3 days of notifying the scheme. A new board, having at least 2 directors of SBI, will take over within 7 days of the issuance of notification. https://t.co/24yXhLfYZs pic.twitter.com/JA2NjMn9JJ
— ANI (@ANI) March 13, 2020
The authorised capital of the lender has been increased to Rs 6,200 crore from Rs 1,100 crore, said Sitharaman.
The scheme has been approved with the objective of protecting depositors’ interest and providing stability to Yes Bank as well as to the entire financial system, she 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.”
On Thursday, SBI said it will invest Rs 7,250 crore in Yes Bank, which is much higher than Rs 2,450 crore it had planned initially for 49 per cent stake in India’s fourth-largest private sector bank.
On March 5, the RBI imposed a moratorium on Yes Bank, restricting withdrawals to Rs 50,000 per depositor till April 3 in view of its poor financial health due to bad loans. (ANI)