Investment In Yes Bank: SBI To Infuse Rs 7250 Crore
Mumbai: The country’s largest lender State Bank of India on Thursday said it has received approval to buy Rs 7,250 crore worth of shares in crisis-hit Yes Bank.
“The executive committee of the central board (ECCB) at its meeting held on March 11 accorded approval for purchase of 725 crore shares in Yes Bank at a price of Rs 10 per share subject to all regulatory approvals,” SBI said in a regulatory filing.
The bank’s shareholding in Yes Bank will remain within 49 per cent of the paid-up capital of the private sector lender.
Last week, the Reserve Bank of India had announced a draft scheme of reconstruction for cash-starved Yes Bank.
The scheme said the strategic investor in the bank will have to pick up 49 per cent stake and it cannot reduce holding to below 26 per cent before three years from the date of capital infusion.
The scheme was announced a day after the RBI imposed a moratorium on the bank, restricting withdrawals to Rs 50,000 per depositor till April 3.
RBI Asks State Govts Not To Move Deposits Out Of Pvt Banks; Says Money Is Safe
The Reserve Bank of India (RBI) has asked state governments not to transfer their deposits out of private sector banks saying apprehensions about the safety of deposits in private lenders are highly misplaced.
In a letter written to chief secretaries of all states, the central bank said moving deposits out of private sector banks could have implications for banking and financial sector stability.
The letter came after reports suggested that some state governments have advised government bodies and other entities under their jurisdiction to transfer their funds held with private sector banks to public sector lenders. This follows the crisis at Yes Bank where the RBI has superseded the bank’s board and placed restrictions on withdrawals.
“We strongly believe that such a move can have banking and financial sector stability implications,” the RBI wrote. “We feel that apprehension on the safety of deposits in private sector banks is highly misplaced and will not be in the interest of stability of the financial system in general and the banking system in particular.”
It requested state governments to reconsider any decision they might have taken in this regard or are in the process of taking such a decision.
“The Reserve Bank has adequate powers to regulate and supervise the private sector banks and by using these powers, it has ensured that the depositors’ money is entirely safe,” the letter said.
The RBI said the resolution of weak private sector banks in the past has been done in a manner that the depositors are not put to loss.
“It is precisely with a view to retaining depositors’ confidence in private sector banks and mitigating their hardship that, after the imposition of a moratorium on Yes Bank Ltd, the RBI has drawn up a draft scheme without any delay and we are making every effort to expedite the finalisation of the scheme,” it added.