Re(con)struction of Yes Bank?
Recently, a
reconstruction scheme for Yes Bank has been notified by the Indian Government.
This shall result in speedy handover of operations to the lenders. This comes
at a point of time when Yes Bank is under RBI's moratorium due to which
withdrawals are restricted. The moratorium is expected to be lifted within 3
days of the issue of notification.
By Sirjan
Kaur | 5 min read
On 5th March, the Reserve Bank of India put an
imposition of a moratorium on Yes Bank, which essentially resulted in
restriction on withdrawals up to Rs 50,000 per depositor till April 3 following
a serious deterioration in the bank's financial position. The RBI also
superseded the existing board of the bank, handing over the administration to
Prashant Kumar, former deputy managing director and CFO of State Bank of India.
After the Cabinet gave its approval for the
restructuring scheme of YES Bank, various
private lending houses like ICICI
Bank, HDFC, Kotak Mahindra Bank and Axis
Bank came on board to inject funds in the bank. The authorized share capital of Yes Bank will be
increased to Rs 6,200 crore from Rs 1,100 crore. The total number of equity
shares shall get altered to 3,000 crore of Rs 2 each now. However, the
Authorised preference share capital will still remain Rs 200 crore.
According to reports, ICICI Bank is expected to
invest Rs 1000 crore in Yes Bank, which means more than 5% holding in the share
capital. Other than that, HDFC is planning on investing Rs 1000 crore and Axis
Bank shall put in Rs 600 crore. Kotak Mahindra Bank is also expected to infuse
capital worth Rs 500 crore under this Reconstruction scheme.
LIC is
supposedly planning on buying around 1.35 billion shares in the company. SBI
mandated on investing Rs 7520 crore in Yes Bank, to pick out 49% equity.
Investment in Yes Bank will be guarded by a 3 year
lock in period for the entire pool of investors. All the measures have been
taken with a motive of protecting Investors, depositors and the stability of
Yes Bank.
Moving on to the voting rights of shareholders, the
extent of the rights of all shareholders except SBI are limited to-
1. Their shareholding
2. 9 percent of the voting rights of the entire pool
of shareholders in total of the now reconstructed bank
3. as gazetted by the Reserve Bank, or whichever
turns out to be lower.
Prashant Kumar shall continue with the
administration of the bank, taking up the positions of Managing Director and
Chief Executive Officer of Yes Bank. Other non-executive chairman and directors
were appointed under the Reconstruction plan. SBI has been given the right to
appoint two other members on the board for administration of the bank. RBI
shall also have the right to appoint members as it thinks fit. Any and all
investors having a share of more than 15% in the share capital of the company,
also have a right to appoint a director to the board.
For the upcoming one year, the employees have been
allowed to operate and work in the positions they currently hold. Till then,
there shall not be any changes in the employee compensation plan too.