Finance Minister Nirmala Sitharaman on Friday said that the Union Cabinet has approved the reconstruction scheme for Yes Bank as proposed by the Reserve Bank of India (RBI) and the moratorium will be lifted within three days after the notification is issued.
Giving details about the scheme, Sitharaman said the State Bank of India (SBI) will invest for 49 per cent equity in Yes Bank and other investors are also being invited. There will be a three year lock-in period for all the investors, she said. However, the lock-in period for SBI would be only for the 26 per cent of the shareholding.
The authorised capital of the lender has been increased to Rs 6,200 crore from Rs 1,100 crore, the finance minister said, adding that the scheme has been approved with the objective of protecting the interest of depositors and providing stability to Yes Bank as well as to the entire financial system.
The finance minister further added, "a new board will be constituted and two directors from SBI will be made its members. Seven days after the notification to lift the moratorium the Administrator will vacate his office."
On Thursday, SBI said it will invest Rs 7,250 crore in Yes Bank, which is much higher than Rs 2,450 crore it had planned initially for 49 per cent stake in the private sector lender that began operations in 2004.
FM Nirmala Sitharaman briefs media along with Prakash Javadekar and Piyush Goyal. (Photo | Somesh Jha)
The RBI had on March 5 imposed a moratorium on Yes Bank, restricting withdrawals to Rs 50,000 per depositor till April 3. The RBI also superseded the board and placed it under an administrator, Prashant Kumar, former deputy managing director and CFO of SBI.
The Cabinet during the day also cleared a proposal to hike the Dearness Allowance by 4 per cent. Announcing the decision, Information & Broadcasting Minister Prakash Javadekar said, "48 lakh employees and 63 lakh pensioners of Central government will be benefitted as the Cabinet approved increasing Dearness Allowance by 4 per cent. The DA will now be 21 per cent from 17 per cent and will cost the government Rs 14,595 crore."
Meanwhile, the Cabinet chaired by Prime Minister Narendra Modi also approved increasing the MSP for Copra crop by Rs 439 for milling quality and for ball category from Rs 9920 to Rs 10300. Union Minister Prakash Javadekar said that this will stabilise the markets and farmers in south India will benefit from the decision. The government also cleared the Remission of Duties or Taxes on Export Product scheme (RoDTEPS)