New Delhi, March 6 (SocialNews.XYZ) The draft reconstruction scheme for Yes Bank framed by the Reserve Bank of India stipulates that the investor bank, State Bank of India (SBI), will not reduce its stake below 26 per cent before completion of three years.
As per the scheme, called 'Yes Bank Ltd. Reconstruction Scheme, 2020', announced 24 hours after a moratorium was placed on the deposits of Yes Bank, the bank's authorised capital will be altered to Rs 5,000 crore and the number of equity shares reduced to 2,400 crore of face value Rs 2 aggregating Rs 4,800 crore only.
SBI will hold 49 per cent stake in the reconstructed bank. It will acquire this stake for not less than Rs 10 with a face value of Rs 2 and premium of Rs 8.
SBI will not reduce its holding below 26% before completion of three years from the date of infusion of the capital.
The rationale given for the reconstruction scheme for Yes Bank is that the rapidly deteriorating financial position of Yes Bank Ltd. relating to liquidity, capital and other critical parameters, and the absence of any credible plan for infusion of capital has necessitated Reserve Bank of India to take immediate action in public interest, particularly in the interest of the depositors.
Accordingly, Yes Bank Ltd. was placed under moratorium by an order notified by the Central government on March 5, 2020.
In terms of section 45 of the Banking Regulation Act, 1949 (10 of 1949), during the period of moratorium, the Reserve Bank of India may, if so considered necessary in public interest or in the interest of the depositors or to secure the management of the banking company, frame a scheme of reconstruction or amalgamation of the concerned banking company.
State Bank of India has expressed its willingness to make investment in Yes Bank Ltd. and participate in its reconstruction scheme. State Bank of India can appoint two nominee directors and RBI may appoint additional directors to the reconstructed bank's board.
As per the draft scheme, no change has been made in the rights and liabilities of the reconstructed bank but its Additional Tier 1 capital has been written down completely and permanently.
The account holders won't be entitled to receive any compensation from the reconstructed bank. For the employees, the terms of service and remuneration of all employees of Yes Bank will continue to remain the same. The board, however, can discontinue the services of key managerial personnel.
There will be no change in the offices or branch network of the reconstructed bank. The reconstructed bank can open new offices and branches or close down existing offices or branches.
Source: IANS
Gopi Adusumilli is a Programmer. He is the editor of SocialNews.XYZ and President of AGK Fire Inc.
He enjoys designing websites, developing mobile applications and publishing news articles on current events from various authenticated news sources.
When it comes to writing he likes to write about current world politics and Indian Movies. His future plans include developing SocialNews.XYZ into a News website that has no bias or judgment towards any.
He can be reached at gopi@socialnews.xyz
This website uses cookies.
