INSUBCONTINENT EXCLUSIVE:
MUMBAI/DELHI: A day after the Reserve Bank of India superseded the Rana Kapoor-promoted Yes Bank board and capped cash withdrawals at Rs
50,000 (Rs 5 lakh in exceptional situations) and the State Bank of India said it was “exploring an investment opportunity” in Yes, the
RBI on Friday came out with a “draft reconstruction scheme” under which SBI will bring in Rs 2,500 crore for a 49% stake in the
crisis-ridden private sector bank.
The scheme proposes full repayment of all deposits, dilution of equity, and write-off of Rs 10,800 crore
of additional tier one (AT-1) bonds.
In a bid to reassure depositors and markets, RBI governor Shaktikanta Das said although a moratorium of
30 days had been imposed, the resolution would be much quicker
RBI has invited comments and suggestions on the scheme up to March 9, after which it will take a final view.
Sources in the government said
the central bank had decided against merging Yes with SBI because it would have put pressure on the balance sheet of the government -owned
bank.
SBI holding not to drop below 26% in 3 yearsThe government and the RBI are hopeful SBI’s funding and Yes Bank’s “strong brand”
would help turn around the bank
The reconstruction scheme envisages increasing the authorised capital of the bank manifold to Rs 5,000 crore from Rs 800 crore.
While the
face value of shares is Rs 2, SBI will pay Rs 10 per share — that is a premium of Rs 8 — and will not reduce its holding below 26% for
Government sources expect SBI to get a higher than entry price as and when it sells down some of its stake
SBI’s investment in fresh equity will proportionately dilute the holdings of existing shareholders.
While some analysts expressed surprise
at the scheme as it placed shareholders’ interest above that of the AT-1 bondholders, the RBI and government sources said this was in line
with Basel norms and the terms of the bond issue
AT-1 bonds are purchased by institutional investors, mutual funds and insurance companies.
The scheme of reconstruction has been proposed
under Section 45 of the Banking Regulation Act 1949, which gives RBI enormous powers to deal with a bank superseding any norms of the market
regulator.
On Friday, rating agency Moody’s downgraded the bank's long-term deposit rating to Caa1 from B2 after the RBI’s moratorium,
which the agency said constitutes an event of default.