SBI to invest Rs 7,250 cr in crisis-hit YES Bank as part of RBI rescue plan

Under the reconstruction scheme, SBI is to buy up to 49 per cent of YES Bank and cannot reduce its holding below 26 per cent for the next three years.

State Bank of India (SBI) on Thursday said it would infuse Rs 7,250 crore into ailing YES Bank to pick up to 49 per cent equity as part of the Reserve Bank of India-mandated bailout plan.

SBI will pick 7,250 million shares at Rs 10 each, and its shareholding will remain within 49 per cent of the paid-up capital of the private sector lender.

Under the restructuring scheme, the authorised capital shall stand altered to Rs 5,000 crore.

The number of equity shares will stand altered to 24,000 million of Rs 2 each aggregating to Rs 4,800 crore.

SBI’s stake in altered capital is expected to be 30 per cent, going by the restructuring scheme. “The executive committee of the central board at its meeting on March 11 accorded approval for purchase of 7,250 million shares of YES Bank at a price of Rs 10 a share, subject to regulatory approvals,” SBI said in an exchange filing on Thursday.

Under the reconstruction scheme, SBI is to buy up to 49 per cent of YES Bank and cannot reduce its holding below 26 per cent for the next three years. The SBI investment of Rs 7,250 crore is much higher than the Rs 2,450 crore it had planned initially for 49 per cent stake in the private sector lender.

Last week, SBI Chairman Rajnish Kumar had said the bank would invest Rs 2,450 crore to buy 2,450 million shares of YES Bank. SBI was also in talks with other investors, and SBI investment would not exceed Rs 10,000 crore.

On March 5, the RBI had 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The RBI also superseded the board and placed it under an administrator, Prashant Kumar, who is a former deputy managing director and chief financial officer of SBI.

The administrator will take on board results for third quarter on Saturday. The final restructuring scheme is expected to be finalised on Friday.

YES Bank is banking on investment by SBI, speedy resolution with support from the RBI and SBI, and fundraising plans to instil confidence among customers, according to administrator.