SBI To Get Back To RBI On Yes Bank Bailout Plan By Monday: 10 Points

Conducting due diligence on Yes Bank bailout: SBI chairman Rajnish Kumar "Many potential investors have approached us," he says RBI has suspended Yes Bank board, imposed withdrawal limit till April 3

Edited by Sandeep Singh (with inputs from agencies)

08 Mar 2020, 09:15 AM IST

SBI chairman Rajnish Kumar said Yes Bank depositors' money is "not at all at risk"

The SBI chairman said the RBI's draft scheme for the reconstruction of Yes Bank is already in public domain and his bank's investment as well as legal teams are working on it. "The draft scheme has to be vetted and examined legally," he told reporters.
The government on Friday laid out a rescue plan for Yes Bank, according to which SBI can take a maximum 49 per cent stake in the private sector lender. That bailout plan came less than 24 hours after the RBI took control of the country's fifth largest private sector lender for 30 days, following months of steady deterioration in its financial position and concerns over governance.
Mr Kumar said SBI is yet to make a decision and will get back to the RBI with comments by Monday. “We may present a plan to RBI along with some other names… that is a possibility," he said. "The investment team will do its due diligence in shortest possible time… then it goes to the board. Final decision rests with the SBI board."
“There are many potential investors. After seeing the schemes, they have approached us. Anyone investor wanting to invest above 5 per cent, they would have to go through all regulatory norms of RBI," the SBI chairman said.
According to the plan, the government has imposed a Rs 50,000 cap on withdrawals, and a 30-day moratorium on new loans and payments. Also, 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.
“If SBI goes solo and picks up 49 per cent in the bank, then today it requires an immediate investment of Rs 2,450 crore," Mr Kumar explained.
Seeking to allay depositors' concerns, the SBI chairman said: “As far as depositors are concerned, there may be some inconvenience for few days… Depositors' money is not at all at risk." Those remarks followed the government's assurance on Friday that Yes Bank's deposits and liabilities will not be affected as per the bailout plan.
Late on Thursday, the RBI placed Yes Bank under a moratorium, capping most withdrawals at Rs 50,000 until April 3 to protect depositors. The regulator had earlier increased Yes Bank's authorised share capital, paving the way for a cash injection after it failed in its months-long attempt to raise enough money to meet regulatory requirements.
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.
Yes Bank is the third major financial institution to unravel in the last six months, following the RBI's moves to take control of Dewan Housing Finance Corp and Punjab & Maharashtra Co-operative Bank.