- RBI to lift Yes Bank’s Moratorium Ahead of its deadline.
- Yes Bank restructured, Will be managed by a new board.
- Morever, Depositors are free but Yes Bank Shareholders are still stuck
Yes Bank is seeing dark clouds everywhere since RBI superseded the operations on March 5th 2020. The depositors had a limit of Rs 50000 withdrawal amount as RBI had placed a 30-day moratorium on the bank. However, there is a ray of hope for this crisis-stricken Yes Bank. Ahead of the RBI’s deadline, Yes Bank may double the withdrawal cap to Rs 100000 from Mar 18th 2020.
Yes Bank Restructured
The Reserve Bank of India plans to remove the Moratorium ahead of its time. However, There is still confusion as to the moratorium will be lifted in one stretch or in stages.
“The order of moratorium on the reconstructed bank issued by the Government of India … 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.
Additionally, Finance Minister Nirmala Sitharaman tweeted about cash withdrawal restrictions and other moratorium conditions on Yes Bank.
Moreover, The government also notified the appointment of Prashant Kumar, former CFO and Deputy MD of State Bank of India (SBI) as the CEO and MD of reconstructed Yes Bank.
Additionally, With SBI investing Rs 7,250 crore in Yes Bank;It became the lead rescuer of the consortium.
In addition, Kotak Mahindra, HDFC, ICICI banks are the other members of the rescue operation.
The Moratorium of the Shareholders Begins
Amongst lifting of the Moratorium, Yes Bank has taken a harsh decision against the Yes Bank shareholders. 75% shares of the holders will be in lock in mode for the coming 3 years.
“Unprecedented situations demand unprecedented solutions,” said Ajay Bodke, CEO-PMS “This is a rescue plan for depositors of YES Bank and it ensures the franchise’s viability over the long-term. So, essentially, the sacrifice authorities are asking SBI and other institutional investors is by locking in a part of their investment over three years. The same is being asked of minority shareholders,” said Bodke.
Bodke believes the lock-in is a good move by the government and regulators.
This decision met with a strong withhold.
“It is unprecedented that a scheme is being introduced disallowing the existing shareholders to sell their shares that too with retrospective effect. Lot of clarifications will be required for such regulations,” Deven Choksey, Group Managing Director, KR Choksey Investment Managers
“The worst-case could be minority shareholders will be forced to go to court against this one-sided treatment,” he added.
On a parallel note, CBI booked Yes Bank founder Rana Kapoor under money laundering case. Rana has allegedly obtaining Rs 307 crore bribe in the purchase of a Lutyen’s zone bungalow from a realty firm to go easy on around Rs 1,900 crore bank loans to the seller’s group companies.