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Yes Bank crisis resolution scheme offers 49% stake to SBI
Offering big relief, the RBI scheme says that all deposits and existing contracts will be honoured after the reconstitution of the Yes bank.
State Bank of India shall pick up a 49% stake in the reconstituted Yes Bank says a scheme floated on Friday to bail out the cash-strapped lender by the Reserve bank of India.
The scheme is called ‘Yes Bank Ltd. Reconstruction Scheme, 2020’, and is largely dependent on the infusion of funds by the government-owned State Bank of India.
“State Bank of India has expressed its willingness to make an investment in Yes Bank Ltd. and participate in its reconstruction scheme,” says the RBI draft circulated amongst the public and various other stakeholders.
The announcement made under section 45 of the Banking Regulation Act, 1949 says the authorised capital of the bank shall stand altered to Rs.50,00,00,00,000 (Rupees Five thousand crore) and number of equity shares will stand altered to 24,00,00,00,000 ( two thousand four hundred crore) each valuing rupees two, pushing the total share value aggregate to Rs. 48,00,00,00,000 (Rupees Four thousand eight hundred crore).
Offering big relief, the scheme says that all deposits and existing contracts will be honoured after the reconstitution of the bank.
“All the deposits with and liabilities of the Reconstructed bank, except as provided in the scheme, and the rights, liabilities and obligations of its creditors, will continue in the same manner and with the same terms and conditions, completely unaffected by the Scheme,” the RBI release says.
It also promises to retain all employees for a year after the infusion of new funds to create a reformed entity.
“All the employees of the Reconstructed bank shall continue in its service with the same remuneration and on the same terms and conditions of service (T&C), including terms of determination of service and retirement, as were applicable to such employees immediately before the Appointed date, at least for a period of one year,” the release said.
The proposed scheme says a new board shall be constituted to replace the administrator appointed by the RBI to run Yes Bank. The new board will have two nominee directors from the SBI and the RBI may appoint additional directors as per its powers.
The branch network and the offices of the reconstructed bank will not be changed and any changes will be done as per RBI guidelines, said the release.
“It will be open to the Reconstructed bank to open new offices and branches or close down existing offices or branches, in accordance with the extant policy of the Reserve Bank and complying with the necessary terms and conditions,” it said.
