A day after the Reserve Bank of India displaced the Rana Kapoor-promoted Yes Bank board and capped cash withdrawals at Rs 50,000 (Rs 5 lakhs in exceptional situations) and the State Bank of India said it was “exploring an investment opportunity” in Yes, the RBI on Friday came out with a “draft reconstruction scheme” under which SBI will bring in Rs 2,500 crores for a 49% stake in the crisis-ridden private sector bank.
The scheme proposes full repayment of all deposits, dilution of equity, and write-off of Rs 10,800 crores of additional tier one (AT-1) bonds. In a bid to reassure depositors and markets, RBI governor Shaktikanta Das said although a moratorium of 30 days had been imposed, the resolution would be much quicker. RBI has invited comments and suggestions on the scheme up to March 9, after which it will take a final view.
Sources in the government said the central bank had decided against merging Yes with SBI because it would have put pressure on the balance sheet of the government-owned bank.
The government and the RBI are hopeful SBI’s funding and Yes Bank’s “strong brand” would help turn around the bank. The reconstruction scheme imagines in increasing the authorized capital of the bank manifold to Rs 5,000 crores from Rs 800 crores.
While the face value of shares is Rs 2, SBI will pay Rs 10 per share that is a premium of Rs 8 and will not reduce its holding below 26% for 3 years. Government sources expect SBI to get a higher than entry price as and when it sells down some of its stakes. SBI’s investment in fresh equity will proportionately dilute the holdings of existing shareholders.