Mumbai, Mar 12: The largest lender State Bank of India on Thursday announced a Rs 7,250-crore fund infusion into the crippled Yes Bank under which it will pick up to 49 per cent equity in the fourth largest private sector lender.
IN PUBLIC INTEREST
*Cover your face with masks to prevent transmission of droplets carrying coronavirus
*Exercise social distancing
*Wash your hands frequently
*Sanitize your hands
STAY HOME & STAY SAFE!
The fund infusion is part of the Reserve Bank-mandated rescue plan.
SBI said its shareholding in Yes Bank will remain within 49 per cent of the paid up capital of the private lender and following the fund infusion, it will pick up 725 crore shares.
“The executive committee of the central board at its meeting held on March 11 accorded approval for purchase of 725 crore shares of Yes Bank at a price of Rs 10 a share, subject to regulatory approvals,” SBI said in an exchange filing on Thursday.
The bank, however, did not mention the exact quantum of stake it will be buying in Yes Bank.
Under the reconstruction scheme, SBI will have to buy 49 per cent of Yes Bank and cannot reduce its holding below 26 per cent before for the next three years.
The SBI investment of Rs 7,250 crore 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.
Last week, SBI chairman Rajnish Kumar had told reporters that the bank would invest Rs 2,450 crore to buy 245 crore shares of Yes Bank. He had also spoken about roping in other investors and SBI investment would not exceed Rs 10,000 crore.
On March 5, the RBI 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The RBI also superseded the board and placed it under an administrator, Prashant Kumar who is a former deputy managing director and CFO of SBI.
Since the RBI action, the central agencies ED and CBI have arrested Yes Bank’s co-founder and former CEO Rana Kapoor for alleged money laundering and corruption, while his wife Bindu and three daughters are also being quizzed by these agencies for their role in siphoning of public funds.
One of the biggest charges against Kapoor is that he illegally benefitted to the tune of Rs 3,000 crore by lending to certain troubled companies like DHFL, Anil Ambani group and Essel group– all the loans worth around Rs 20,000 crore that have turned into bad debt.
Categories: Banking, India News
Leave a Reply