HDFC, ICICI Bank, Axis Bank, Kotak Bank join SBI’s Yes Bank rescue operation; bring in Rs 3,100 cr

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Updated: March 13, 2020 8:44:44 PM

Major private lenders HDFC, ICICI Bank, Axis Bank and Kotak Bank on Friday emerged as the private sector saviours of Yes Bank, joining State Bank of India in its mega bailout of the troubled bank. Together, these investors will bring in Rs 3,100 into cash-strapped Yes Bank.

While India’s largest PSU bank State Bank of India will pick up 49% stake Yes Bank, other investors are also expected to pitch in the bailout of the cash-strapped bank.

Major private lenders HDFC, ICICI Bank, Axis Bank and Kotak Bank on Friday emerged as the private sector saviours of Yes Bank, joining State Bank of India in its mega bailout of the troubled bank. While HDFC and ICICI Bank will invest Rs 1,000 crore each in Yes Bank for buying over 5% equity stake in it, Axis Bank will invest Rs 600 crore, and Kotak Bank will put in Rs 500 crore. India’s largest private lender HDFC, and the country’s second, third and fourth largest private banks ICICI Bank, Axis Bank and Kotak Bank, will be in a three-year lock-in period and would not be allowed to reduce their stake in Yes Bank below 75% of the amount they invest.

Finance Minister Nirmala Sitharaman, in a separate press briefing today, told reporters about the 75% investment lock-in required for investors other than SBI. She also said that the government has raised Yes Bank’s authorised capital to Rs 6,200 crore. Meanwhile, earlier this week, SBI got the board approval to invest up to Rs 7,250 crore in Yes Bank. India’s largest PSU bank SBI is to acquire up to 49% of the post-issue equity stake in Yes Bank under the RBI-monitored reconstitution plan.

Earlier last week, the Reserve Bank of India presented a draft restructuring plan to bail out Yes Bank, with the plan focused on three things primarily. This includes protection of the interest of depositors; providing stability to Yes Bank; and ensuring a healthy state of banking system and overall financial health, Nirmala Sitharaman said. She also said that the moratorium will be lifted from the bank within three working days of the release of the notification of the final reconstruction plan. RBI had imposed a one month moratorium on India’s fourth largest private lender in the wake of rising bad loans at the bank. Yes Bank had extended loans to companies, some of which turned to be the biggest corporate defaulters in the country including Cox & Kings, Anil Ambani Group and DHFL, among others.

Meanwhile, as the bank was put under the moratorium, the government had also put a cap on the withdrawal limit of Rs 50,000 per person, and panic ran through the depositors. The Finance Minister tried to assuage the fears of account holders and assured that the money is safe and the RBI is moving fast to come up “with a good resolution”, she said last week. She also said that the government has the best interest of account holders and the bank in mind.

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