SBI set to acquire 49% stake in Yes Bank

Under the reconstruction plan, State Bank of India will be issued 245 crore shares at a price of Rs 10 per share for Rs 2450 crore, thereby acquiring 49% stake in Yes Bank.

The Reserve Bank of India (RBI) on Friday (6 March 2020) unveiled a draft scheme of reconstruction for Yes Bank and invited suggestions from members of public, including the banks' shareholders, depositors and creditors on the scheme. This comes after Yes Bank was placed under moratorium by an order notified by the Central Government on 5 March 2020.

The draft scheme was sent to Yes Bank and State Bank of India for comments.

State Bank of India expressed its willingness to RBI said to make investment in Yes Bank and participate in its reconstruction scheme.

The scheme called 'Yes bank Reconstruction Scheme, 2020' shall come into force on such date as the Central Government may, by notification in the Official Gazette, specify.

As per the draft scheme, the authorized capital shall stand altered to Rs 5000 crore and number of equity shares will stand altered to 2400 crore of Rs 2 each aggregating to Rs 4800 crore.

The Investor bank shall agree to invest in the equity of the reconstructed bank to the extent that post infusion it holds 49% shareholding in the reconstructed bank at a price not less than Rs 10 (face value of Rs 2 and premium of Rs 8). The investor bank shall not reduce its holding below 26% before completion of three years from the date of infusion of the capital.

Currently, Yes Bank has 255 crore shares of Rs 2 per share. SBI will be issued 245 crore shares at a price of Rs 10 per share for Rs 2450 crore. This will be 49% of the share capital of the reconstructed bank.

SBI shall not reduce its holding below 26% before completion of three years from the date of infusion of the capital.

SBI shall have nominee directors appointed on the board of the reconstructed bank. RBI may appoint additional directors to the board. The members of the board so appointed shall continue in office for a period of one year, or until an alternate board is constituted by Yes Bank.

State Bank of India (SBI) is an Indian multinational, public sector banking and financial services statutory body. Government of India holds 57.68% stake in SBI as on 31 December 2019.

Shares of the largest public lender were trading 3.36% lower at Rs 261.35. The stock moved in a range of Rs 258.80 to Rs 262.55 so far during the day.

Meanwhile, shares of the private lender Yes Bank were currently trading 24.69% higher at Rs 20.20. The stock moved in a range of Rs 17 to Rs 21.20 so far during the day.

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