Centre notifies Yes Bank’s Reconstruction Scheme
On 10th March 2020, the Finance Minister Nirmala Sitharaman announced the Centre’s approval of the Yes Bank’s reconstruction scheme proposed by the Reserve Bank of India. She stated that the scheme was approved keeping in mind the interest of the depositors and strengthening the Yes Bank’s financial stability. The Centre’s notification regarding the same was followed by the private lending institutions like HDFC and ICICI Bank stating that they shall invest a sum of ?1,000 crore each, while Axis Bank said that it shall invest 600 crore.[1]
The Finance Minister stated that there shall be a three-year lock in period for all the investors except the State of Bank of India whose lock-in period shall be limited to 26% of the shareholding. A Lock-In period refers to the time period during which the investors can neither sell nor redeem their shares in the particular company or institution. She also announced the constitution of a new board and that the directors of the State Bank of India shall be its members. Earlier, the RBI had imposed a moratorium on Yes Bank which is India’s fifth-largest private lending institution which restricted the withdrawals to ?50,000 per depositor till April 3. The moratorium affected the bank’s position negatively. The Financial Minister added that the RBI will lift the moratorium within three days after the notification and the new board will be able to take full charge
[1] https://economictimes.indiatimes.com/industry/banking/finance/banking/union-cabinet-approves-yes-bank-reconstruction-plan/articleshow/74611656.cms?from=mdr
