SBI will respond by Monday on 'draft reconstruction plan' for crisis-hit Yes Bank: Chairman Rajnish Kumar

Rajnish Kumar, Chairman, State Bank of India (SBI) said today that the SBI has got its time till Monday to respond to the draft scheme of reconstruction for crisis-hit Yes Bank. He informed that SBI's investment and legal team is doing due diligence in the matter.

RBI earlier on Friday introduced a 'draft reconstruction plan' for Yes Bank, under which SBI will buy up to 49 per cent stake in the troubled Yes Bank with an investment of Rs 2,500 crore.

RBI's draft 'reconstruction scheme' for Yes Bank's

The draft 'reconstruction scheme' says, Yes Bank's authorized capital will be increased to Rs5,000 crore - from current Rs 600 crore - and the paid-up capital will be enhanced to Rs 4,800 crore, comprising 24 billion shares of Rs 2 face value. This will be effective from the day the government notifies the scheme in the Official Gazette. Currently, there are 2.55 billion fully paid-up shares issued, totalling Rs 510 crore.

During his interaction with reporters in Mumbai today, SBI chairman Kumar told that the legal team of State Bank of India is working on the draft scheme proposed by Bank of India to improve the status of Yes Bank. He has also said that the depositors' money in Yes Bank is completely safe. He added the survival of the bank is a must.

Kumar informed that SBI will invest Rs 2450-2500 crore in the fifth largest private bank in the country. He said that SBI will try to implement the resolution plan before RBI given deadline of Monday. He added the interests of SBI shareholders will not be compromised and there will be no impact on the bank's capital adequacy ratio. He said a new board of Yes Bank will be constituted with two nominees from SBI.

Kumar said that 23 potential investors have approached SBI after looking at the investment plan. He stated that the SBI may buy 26 or 49 per cent stake in Yes Bank. This is dependent on how much investment is involved. The minimum investment for SBI would be Rs 5,500 crore if it picks 26 per cent stake in Yes Bank.

SBI is also looking at proposals from investors who have shown interest in buying a stake in Yes Bank.

Investment firm Nomura on Yes Bank

Global investment firm Nomura in its investment has said that despite repeated relief measures - taken by the government and the Reserve Bank of India (RBI) to put together a rescue arrangement for Yes Bank - are symptomatic of wider credit risks that still lurk in India's financial system.

The RBI took over from the bank's board for 30 days and imposed limits on withdrawals to Rs 50,000 to protect depositors.