Govt notifies Yes Bank reconstruction scheme

Shareholders holding 100 or more shares to face a three-year lock-in on their 75% investment.

The government on Friday (13 March) notified the scheme of reconstruction for Yes Bank. As per the reconstruction scheme, apart from State Bank of India and other new private investors picking up equity in the cash strapped bank, all existing shareholders who are holding 100 or more shares will also face a three-year lock-in for their 75% investment.

"There shall be a lock-in period of three years from the commencement of this Scheme to the extent of seventy-five per cent in respect of-- (a) shares held by existing shareholders on the date of such commencement; (b) shares allotted to the investors under this Scheme: Provided that the said lock-in period shall not apply to any shareholder holding less than one hundred shares, the notification issued late on Friday (13 March 2020) said.

Meanwhile, the restrictions on withdrawals from the bank accounts will be lifted in three working days or on 18 March. The order of moratorium on the reconstructed bank issued by the Government of India...shall cease to have effect on the third working day at 18:00 hours from the date of commencement of this Scheme, the notification said.

Earlier on 5 March, the Reserve Bank of India (RBI) placed Yes Bank under a moratorium, restricting withdrawals to Rs 50,000 per depositor till 3 April. It had also superseded the board and placed it under an administrator, Prashant Kumar, former deputy managing director and CFO of SBI.

Under the scheme, Prashant Kumar has been appointed as the chief executive officer and managing director of the bank, with Sunil Mehta, former non-executive chairman of punjab national bank as non executive chairman, and Mahesh Krishnamurthy and Atul Bheda as non-executive director. The new board will be formed within seven days from cessation of the moratorium.

Additionally, SBI will nominate two officers as directors and the RBI may also appoint one or more persons as additional directors.

The notification states that all employees of the reconstructed bank will continue working with the same remuneration and on the same terms and conditions of service for a minimum period of one year. Provided that the board of directors of the reconstructed bank shall, for reasons to be recorded in writing and after following the due procedure, discontinue the services of the key managerial personnel at any time as it deems necessary.

While foreign and domestic institutional investors have been paring their stake in the troubled Yes Bank, the stake of retail investors has been on the rise.

As on 31 December 2019, foreign institutional investors (FII) holding in the private lender stood at 15.17% while domestic institutional investors (DII) held 13.81% stake. The aggregate retail holding in Yes Bank at the end of December quarter stood at 47.96%.

Yes Bank notified to the stock exchanges on Saturday (14 March 2020) that 'Yes Bank Reconstruction Scheme, 2020' has been approved by the central government and the scheme has been notified in the Official Gazette on 13 March 2020. The scheme has come into force on 13 March 2020.

The bank said that as per the scheme, 75% of the shareholding of the shareholders holding 100 or more shares will be automatically under the lock-in. Accordingly, all shareholders holding 100 or more equity shares are advised to exercise utmost caution while dealing in the script of the bank and be guided by the scheme, it added in a statement.

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