Cabinet approves reconstruction plan for Yes Bank
The Reserve Bank of India appointed an administrator in place of the board of directors of Yes Bank.
The Union Cabinet approved the reconstruction plan for Yes Bank on March 13, 2020. State Bank of India (SBI) will buy a 49 percent stake of Yes Bank under this scheme. Finance Minister Nirmala Sitharaman said that the Cabinet has approved the reconstruction plan of Yes Bank suggested by the Reserve Bank of India.
Earlier, the Reserve Bank of India appointed an administrator in place of the board of directors of Yes Bank. A withdrawal limit of up to Rs 50,000 and other restrictions was imposed. Depositors were facing a lot of difficulty in withdrawing their capital due to RBI’s decision.
HDFC and ICICI Bank to invest Rs. 2,000 crore
Private Banks HDFC, ICICI, Axis Bank and Kotak Mahindra have issued a statement and announced to invest in the Yes Bank. HDFC is going to invest Rs 1000 crore, ICICI will also invest Rs. 1000 crore, while Axis Bank planned to invest Rs 600 crore to buy 60 crore shares. Kotak Mahindra Bank will also buy 50 crore shares of Yes Bank with an investment of Rs 500 crore.
SBI’s investment in Yes Bank
State Bank of India (SBI) will buy a 49 percent stake in Yes Bank. SBI will not be able to reduce its stake to less than 26 percent for three years. The Finance Minister said that the authorized capital of Yes Bank will increase from Rs 1,100 crore to Rs 6,200 crore. This restructuring plan has been approved keeping in mind the interests of the account holders. This will provide stability to Yes Bank as well as the entire financial system. Earlier, SBI had approved to invest Rs 7,250 crore in Yes Bank which is much more than its initial plan to invest Rs 2,450 crore in Yes Bank.