Due Diligence On Yes Bank, Have Time Till Monday To Go To RBI, Says SBI

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SBI chairman Rajnish Kumar said Yes Bank depositors’ money is “not at all at risk”

State Bank of India (SBI) chairman Rajnish Kumar said on Saturday that the lender is conducting due diligence on the restructuring plan for Yes Bank, and will get back to the Reserve Bank of India (RBI) with comments by Monday. His comments come a day after the government laid out a rescue plan for Yes Bank under which SBI – the country’s largest lender by assets – will take a 49 per cent stake in the troubled private sector lender. The central bank has suspended Yes Bank’s board and imposed a withdrawal limit of Rs 50,000 on its account holders till April 3.

Here are 10 things to know:

  1. Finance Minister Nirmala Sitharaman said on Friday the restructuring plan for Yes Bank will be implemented within 30 days, adding that the depth of the problems at the private sector bank were still being assessed.

  2. On the same day, the Reserve Bank of India (RBI) said State Bank of India (SBI) will pick up a 49 per cent stake.

  3. Friday’s rescue plan came less than 24 hours after the RBI took control of Yes Bank because of a serious deterioration in its financial position.

  4. The RBI had the previous day placed Yes Bank under a moratorium and said it would swiftly work on a revival plan.

  5. Seeking to allay depositors’ concerns, the SBI chairman said that their money is “not at all at risk”.

  6. The RBI said it had increased Yes Bank’s authorised share capital, paving the way for a cash injection after it failed in its months-long attempt to raise enough money to meet regulatory requirements. 

  7. Based on details in the RBI’s statement, analysts calculated that SBI would invest some Rs 2,500 crore.

  8. Yes Bank, struggling under a growing pile of bad debt, has battled for months to raise the capital it needs to stay above regulatory requirements. Since late last year, it had been trying to raise $2 billion, and in February delayed its quarterly results.

  9. Yes Bank is the third major financial institution to unravel in the last six months, following the RBI’s moves to take control of Dewan Housing Finance Corp and Punjab & Maharashtra Co-operative Bank.

  10. Many analyst groups have downgraded Yes Bank in the past few weeks. On Saturday, credit ratings major Moody’s said actions by the authorities to date have not reduced the probability of default as evidenced by the moratorium announcement and highlight the continued uncertainty around private sector bank resolutions in the country.

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