State Bank of India approved an investment of Rs 7,250 crore in Yes Bank Ltd. as part of the plan to rescue the struggling private sector lender.
The executive committee of the central board has approved the purchase of 725 crore equity shares of Yes Bank at a price of Rs 10 per share, SBI informed exchanges. Its stake in Yes Bank will remain under 49 percent of the paid up capital of the bank.
The investment commitment is higher than SBI’s original plan of putting in Rs 2,450 crore to buy 49 percent stake in the private bank. SBI Chairman Rajnish Kumar had told reporters last week that the bank would invest Rs 2,450 crore to purchase 245 crore equity shares in Yes Bank. India’s largest lender would then seek participation from other investors to bring in equity necessary to recapitalise Yes Bank, Kumar had said.
SBI’s total investment would not exceed Rs 10,000 crore, Kumar said.
According to a person with direct knowledge of the developments at Yes Bank, so far negotiations with domestic and international investors have not resulted in a firm bid.
As per the draft plan released by the Reserve Bank of India last week, SBI would be required to maintain at least 26 percent stake in Yes Bank for a period of three years. Should the number of shares in the authorised share capital remain at 2,400 crore suggested in the draft plan, SBI’s purchase of 725 crore shares would imply a 30 percent shareholding in Yes Bank. SBI, however, did not specify its shareholding in Yes Bank in its notice to stock exchanges.
Last week, the government and RBI had placed Yes Bank under a moratorium after its financial position deteriorated significantly. Depositors of the private bank are not allowed to withdraw more than Rs 50,000 till April 3. The bank is not allowed to extend any fresh loans.
Also Read: Yes Bank Revival Is A Formidable Challenge
The central bank also superseded Yes Bank’s board and appointed former SBI CFO Prashant Kumar as an administrator to run the affairs for the moratorium period.
RECOMMENDED FOR YOU
POPULAR