- SBI has agreed to invest Rs 2,450 crore to buy 49% stake in Yes Bank
- SBI chairman said that Yes Bank will soon return to normal operation
- Mr Kumar said he received no direction from the government to intervene
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Mr Kumar said that the moratorium on the Yes Bank could be lifted as soon as "within a week". It is a collective effort by the RBI, the government and SBI, he said. “There is a certain process for lifting the moratorium and bringing in new capital… Effort is that they do it within a week or less than that,” he said.
Reiterating that Yes Bank depositors' money is safe and the private sector bank will soon return to normal operations, Mr Kumar said: “I want to assure Yes Bank customers that once we (SBI) step in, they shouldn't worry about money… The financial system is sound.” He also said it will soon be “business as usual” once SBI and other investors steps in.
Currently, the RBI - which took control of Yes Bank last week - has capped Yes Bank withdrawals at Rs 50,000 till April 3 and imposed limits on withdrawals to protect depositors.
As part of the RBI-backed bailout plan for the troubled lender, SBI has agreed to immediately invest Rs 2,450 crore to buy 49 per cent stake in Yes Bank as part of the rescue deal. SBI will be required to maintain a minimum holding of 26 per cent in Yes Bank for three years from the date of capital infusion and retain all of the private sector lender's employees as part of the deal.
Stating that Yes Bank's survival is “very very crucial to the stability of the financial system,” the SBI chairman said: “Let us admit, it is the question of the fourth largest (private) bank, it is not a small problem.”
“Yes Bank obviously needs capital… Its efforts to raise capital have not fructified over the last one year.” The debt-laden lender failed to raise the capital it needs to stay above mandated regulatory requirements.
Asked if SBI was asked to intervene in the Yes Bank crisis, Mr Kumar said: “I haven't received any direction from the government directly… Believe it or not, but yes, we are closely working with the RBI for sure (to save Yes Bank).
“The stability of the financial system is the responsibility of the RBI. As per law, the RBI has to consult the government, and SBI is the largest bank in the country... I don't think anybody can act solely (in saving Yes Bank): RBI, government or SBI. It is part of a collective effort.
Yes Bank's founder and former managing director, Rana Kapoor, is in police custody until March 11 after he was arrested on money-laundering charges.
Struggling under a growing pile of bad debt, Yes Bank has been trying to raise the capital it needs to stay above regulatory requirements. Initially, Yes Bank wanted to raise $2 billion, which was later brought down to $1.2 billion as it could not rope in any investor. In February, the bank delayed the release of its financial results for the October-December period.