SBI board okays $975 mn investment in moratorium-hit Yes Bank
Photo Credit: Reuters

State Bank of India’s board has approved an investment of Rs 7,250 crore ($975 million) in cash-starved private sector lender Yes Bank, India's largest lender informed stock exchanges on Thursday.

The board has approved the purchase of 725 crore equity shares of Yes Bank at a price of Rs 10 per share

State-owned SBI said its shareholding in the private sector lender will stay within 49% of the paid-up capital of the bank.

On Saturday, SBI had said it would need to invest up to Rs 2,450 crore ($331 million) to buy a 49% stake in Yes Bank as part of the initial phase of a rescue deal for the troubled lender.

The lender said its total investment would not exceed Rs 10,000 crore.

The rescue plan states SBI will not be allowed to reduce its stake to below 26% for at least three years.

SBI said it would try to implement a reconstruction of Yes Bank much before the end of a 30-day moratorium imposed by the central bank. It also said it was in talks with others keen to invest in the troubled bank. 

In fact, persons in the know told Mint in a report published yesterday that Housing Development Finance Corp. Ltd (HDFC) and automobile financier Kotak Mahindra Prime Ltd might each put Rs 2,000 crore ($270 million at current exchange rate) in moratorium-hit Yes Bank.

“HDFC, along with four to five other banks and NBFCs (non-banking financial companies), has proposed to invest in the equity of Yes Bank,” one of the persons said.

Earlier this month, the Reserve Bank of India (RBI) imposed a moratorium on Yes Bank, superseded its board and appointed former State Bank of India chief financial officer Prashant Kumar as administrator.

The banking regulator also capped the withdrawal of deposits from Yes Bank to Rs 50,000 till April 3.

Placing Yes Bank under a 30-day moratorium, the central bank imposed limits on withdrawals to protect depositors and said it would work on a revival plan. The move spooked depositors, who rushed to withdraw funds from the bank.

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