The moratorium on Yes Bank, including a cap on withdrawals, will be removed as early as in three working days from the notification of the reconstruction plan for the private bank, Finance Minister Nirmala Sitharaman said on Friday.
The moratorium on Yes Bank, including a cap on withdrawals, will be removed as early as in three working days from the notification of the reconstruction plan for the private bank, Finance Minister Nirmala Sitharaman said on Friday. She did not tell when is the notification expected. Yes Bank is due to announce its delayed fiscal third-quarter results tomorrow (Saturday), where the bank is also expected to detail out its financial position and plans for the future. The Union Cabinet on Friday approved the reconstruction scheme of cash-strapped Yes Bank, which includes a bail out and equity investment by India’s largest PSU bank State Bank of India. Nirmala Sitharaman said: “The plan has been approved and depositors have been kept in mind, within three working days of the notification of the scheme, the moratorium that Yes Bank has been placed under will be lifted.”
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The move comes as a breather for the troubled depositors of the private sector lender, who have had their withdrawal limit capped at Rs 50,000 by the central bank last week. “State Bank of India (SBI) will invest 49 per cent in Yes Bank and there will be a lock-in period of three years for 26 per cent of the investment that SBI brings in,” Nirmala Sitharaman said with regard to the reconstruction plan. The Finance Minister added that private investors are also being roped in by the RBI, who will have a three-year lock-in period where 75 per cent of their investment will be locked-in. Meanwhile, India’s second-largest private bank ICICI Bank approved an investment of up to Rs 1,000 crore in Yes Bank.
According to the reconstruction scheme approved by the Union Cabinet, the new board of Yes Bank will take over within seven-calendar days since the notification is put out. Prashant Kumar, the man appointed to lead Yes Bank out of the crisis last week, will leave his office and hand the charge over to the new board, Sitharaman informed. SBI will have members on the newly constructed Yes Bank board.
SBI had yesterday informed the stock exchanges that its board has given an approval to purchase 725 shares at Rs 10 per share. Earlier last week, Yes Bank was placed under a moratorium and its board was superseded by the RBI, placing Prashant Kumar, former CFO of SBI incharge of the cash-starved private sector lender. Yes Bank is due to announce its results for the third quarter of thai fiscal tomorrow.