Yes Bank moratorium to end in ‘3 working days’, rescue plan notified

Account holders stand in a queue to withdraw money from Yes Bank, in Surat.

The government has notified the reconstruction scheme for capital-starved Yes Bank. The restrictions on withdrawals from its accounts up to 50,000 will be lifted in “three working days,” the Finance Ministry said in a notification.

“The order of moratorium on the reconstructed bank… shall cease to have effect on the third working day at 18:00 hours from the date of commencement of this Scheme,” the government said in a notification on Friday.

On March 5, the Reserve Bank of India placed the crisis-hit Yes Bank under a moratorium. The banking regulator took control of the Yes Bank board and imposed a withdrawal limit from the bank accounts till April 3.

According to RBI-backed rescue for the troubled lender, State Bank of India will acquire up to 49% stake in Yes Bank. On Thursday, SBI board approved a proposal to invest 7,250 crore in Yes Bank by purchasing 7,250 million shares at 10 apiece.

According to the proposal, HDFC and ICICI Bank will infuse 1,000 crore each, Axis Bank 600 crore and Kotak Mahindra Bank (KMB) Ltd 500 crore into Yes Bank.

The state-run lender cannot reduce its holding below 26% before for the next three years while other investors will be subject to a three-year lock in period for 75% of their investment, the notification mentioned.

The authorised capital of the reconstructed bank will stand altered to 6,200 crore and number of equity shares to 3,000 crore.

It has appointed Prashant Kumar as CEO & MD of Yes Bank. Former non-executive chairman of Punjab National Bank Sunil Mehta is appointed as non- executive chairman. Mahesh Krishnamurthy and Atul Bheda are non-executive directors. The investor bank shall nominate two officers as directors in addition new board, the notification said.

Further, the notification stated “the investor bank (SBI) shall nominate two more officers as Directors to the new board and the RBI may appoint one or more additional directors as necessary.”

Any investor who is permitted to have voting right of fifteen per cent shall have the right to nominate one director on the board, the notification added.