The Reserve Bank of India (RBI) has set an upper limit for withdrawal of cash from Yes Bank, which is facing a cash shortage. Now the bank account holders will be able to withdraw a maximum of ₹ 50,000.
After a serious deterioration in Yes Bank’s financial situation, the RBI acquired its board of directors for 30 days. Prashant Kumar, former SBI DMD and CFO, has been appointed as the bank’s administrator.
RBI will introduce a restructuring plan for Yes Bank soon. Earlier, the government had forwarded the State Bank of India (SBI) to save the bank.
The government has approved SBI’s plan to buy shares in Yes Bank. Its official announcement will be made soon, said sources. SBI will lead the consortium buying stakes in Yes Bank.
The SBI and LIC together may buy 49% of the stakes of Yes Bank for ₹ 490 crore. This report led to a 27% jump in Yes Bank shares on the NSE. On the other hand, SBI’s stock declined by 5%. However, buying from lower levels led to recovery and closed with gains of around 1%.
SBI chairman’s hopes about Yes Bank dashed
SBI Chairman Rajnish Kumar had said in an interview in January that Yes Bank would not fail. “It is an important bank with a balance sheet of about $ 40 billion (₹ 2.85 lakh crore),” he had said, adding “Its failure will not be good for the Indian economy. I am sure some solution will come out.”
However, due to the high NPA of Yes Bank, the bank has become short of cash. Therefore, the bank is trying to raise capital. Yes Bank, which started in 2004, had assets worth Rs 3,71,160 crore as of June last year.
Promoter shareholding 8.33%
Yes Bank, which was facing a cash crunch, had a loss of Rs 629 crore in the July-September quarter. The bank said last month, postponing the December quarter results, that the results would be released by 14 March.
The bank has been struggling for more than a year. In 2018, the RBI reduced the tenure of Yes Bank co-founder Rana Kapoor as CEO. Raising capital as CEO in March last year is the priority for Ravneet Gill.
According to the rules, Yes Bank wants to raise funds to increase the minimum capital ratio. The bank management had reported in September 2019 about a plan to raise Rs 14,000 crore. The share price of the bank was Rs 400 in August 2018, it is now Rs 37.20.
The bank has a market cap of Rs 9,398.49 crore. Promoter shareholding declined to 8.33% in December 2019. These shares are held by Madhu Kapoor, Yes Capital and Mags Finvest. Co-founder Rana Kapoor has sold his entire shares. Promoter shareholding in Yes Bank was 17.97% in August 2019.