Yes Bank board may discuss Rs 15,000-20,000 cr fund raising, management shuffle on March 26

Published: March 24, 2020 5:45:59 AM

State Bank of India (SBI) and seven other lenders infused Rs 10,000 crore in Yes Bank via equity infusion.

Yes Bank board, Yes Bank, Punjab National Bank, Sunil Mehta, State Bank of India, credit growth, Ananth NarayanThe new board will also take a call on changes in senior management positions.

By Ankur Mishra

The second round of funding, senior management change and business continuity will be on top of the agenda when new Yes Bank board assumes charge on March 26, sources close to development told FE. Yes Bank’s new board has eight members, chaired by former Punjab National Bank (PNB) chairman Sunil Mehta. The current administrator Prashant Kumar will assume charge as managing director and CEO. The new board will finalise quantum and options for further fund raising,” the source added. FE has learned that the quantum of second round of fund raising may be between Rs 15,000 to Rs 20,000 crore.

State Bank of India (SBI) and seven other lenders infused Rs 10,000 crore in Yes Bank via equity infusion. SBI alone has infused Rs 6,050 crore into Yes Bank for picking up a 48.2% stake. According to sources, SBI has already transferred the said amount in Yes Bank and other lenders will complete the transaction in next few days. RBI had already given assurance of liquidity support to the private
lender. RBI governor Shaktikanta Das said on March 16 that regulator is ready to provide liquidity support to the private lender when it is needed.

RBI had appointed former deputy governor R Gandhi and associate professor of SP Jain Institute of Management and Research Ananth Narayan as additional directors on the board of Yes Bank. Mahesh Krishnamurthy and Atul Bheda were also appointed by the government as non-executive directors. SBI had nominated its deputy managing directors J Swaminathan and Partha Pratim Sengupta on the Yes Bank board. The new eight member board will assume charge on March 26.

The new board will also take a call on changes in senior management positions. RBI had earlier notified in the reconstruction plan that employees of the bank shall continue service in the bank with same remuneration and on same conditions for a period of at least one year. However, newly constructed board has freedom to discontinue services of senior management.

FE had earlier reported that new board of Yes Bank will focus on bringing down cost of deposits and may consider reducing savings rate to below 6%. According to sources, there was limited withdrawal of deposits from Yes Bank due to Covid-19 issue, after restrictions were lifted on March 18. RBI had put restriction on the troubled lender on March 5 under which customers of the bank were allowed to withdraw up to Rs 50,000. There was a sharp reduction in total deposits of the bank from Rs 2.09 lakh crore in September last year to Rs 1.37 lakh crore till March 5, 2020. The cost to income ratio of the private lender in the December quarter stood at 100.4%, up from 44% a year ago. The bank is now looking to improve credit growth and wants to focus more on the retail segment. The private lender is also banking on recoveries of Rs 8,500-10,000 crore in the next fiscal.

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