This Article is From Mar 06, 2020

SBI Shows Interest In Buying 49% Stake In Crisis-Hit Yes Bank: 10 Points

Finance Minister Nirmala Sitharaman assured depositors that there will be no loss to any Yes Bank depositor.

SBI Shows Interest In Buying 49% Stake In Crisis-Hit Yes Bank: 10 Points

Nirmala Sitharaman said she has asked the RBI look into the difficulties at Yes Bank.

Highlights

  • RBI has a scheme to revive the Bank: Shaktikanta Das
  • Yes Banks board suspended for 30 days by RBI
  • Withdrawal limit of Rs 50,000 set by the central bank
The Reserve Bank of India (RBI) on Friday said the State Bank of India (SBI) has expressed willingness to invest in crisis-ridden Yes Bank. In a draft reconstruction scheme for the private lender, the central bank also said that the investor bank shall invest in Yes Bank to the extent that it will hold 49 per cent equity after the infusion. A day after the RBI suspended Yes Bank's board for a period of 30 days and imposed a withdrawal limit of Rs 50,000 on its account holders till April 3, Finance Minister Nirmala Sitharaman said that governance issue at Yes Bank is a matter of concern, adding that deposits and liabilities of the bank will not be affected. "It is not that the Yes Bank matter has come up yesterday or today; I would like to place it on record that RBI has been consistently monitoring situation since 2017," Finance Minister said. She has asked RBI to act so that due process of law takes course with a sense of urgency, Ms Sitharaman added.

Here are 10 things to know about Yes Bank Crisis:

  1. In a draft reconstruction plan for the crisis-ridden Yes Bank, the RBI on Friday said that SBI has expressed willingness to invest in the private lender and that it will bring in 49 per cent equity. It also said that Yes Bank's capital stands altered at Rs 5,000 crore.

  2. Meanwhile, addressing a press conference, the Finance Minister said she has asked the RBI look into the difficulties at Yes Bank, the role played by various individuals and prevailing regulatory and supervisory norms. "Have asked RBI to act so that due process of law takes course with a sense of urgency," Ms Sitharaman said.

  3. Detailing about the riskier lending the bank undertook Ms Sitharman said that the Yes Bank had lent to very highly stressed companies.

  4. Yes Bank had exposure to stressed Anil Ambani Group, Essel Group, Vodafone, DHFL and IL&FS since prior to 2014, Ms Sitharaman said.

  5. The Finance Minister added that since 2017, the central bank noticed governance issues and weak regulatory compliance at Yes Bank, besides wrong asset classification and risky credit decisions.

  6. "A new CEO was appointed as a result and clean-up of the bank commenced from thereon," she said.

  7. The finance minister assured the depositors that their funds in Yes Bank are safe. "Deposits and liabilities will continue unaffected as before," she said.

  8. Yes Bank shareholders suffered huge losses in trade on Friday after the central bank imposed withdrawal limit of Rs 50,000. The stock plunged 56 per cent to close at Rs 16.20.

  9. Long queues of Yes Bank account holders were seen at various branches across the country as people scrambled to withdraw money from their bank accounts.

  10. Solution being worked on to revive Yes Bank well before the moratorium period, RBI appointed bank administrator Prashant Kumar was quoted as saying by news agency Press Trust of India.