RBI guv states 'Yes Bank Reconstruction scheme sustainable'; hails pvt-public partnership

Amid the restructuring of stressed lender Yes Bank, RBI governor Shaktikanta Das, on Monday, said that the RBI was confident that the restructuring plan was working and will successfully revive the bank soon, in a press conference at RBI headquarters. Assuring the RBI had enough liquidity to support Yes Bank if needed, he highlighted the contribution of private banks has highlighted the confidence of the private players in Yes Bank. He also assured depositors that there was no rush to withdraw their money as the moratorium will be lifted by March 18.

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RBI assures Yes Bank: Reconstruction scheme sustainable

"We will mainly focus on 2 issues - Yes Bank and certain aspects related to the fallout of coronavirus (COVID-19) and its impact on the economy. We have issued a taken swift action regarding the reconstruction scheme of the bank and the government has issued a notification. The moratorium will be lifted by March 18 at 6 PM and the board will take over by March 26 administrator will vacate office, as per government notification," he said.

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He added, "Its a very sustainable and is the first successful public-private partnership for restructuring the bank. With the failure of a commercial bank, we have not done amalgamation of the bank with another, which is what is done usually. The identity of the bank (Yes Bank) has been retained and the contribution of the private banks shows the confidence of the private players in the bank in difficulty - which is first of its kind."

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'RBI can provide liquidity if required': Guv

Talking about the first successful private-public bank partnership to revive the bank, he said that the depositors did not need to worry about the fate of their money. The government has notified about the restructuring scheme on March 15 - allowing SBI to take up a 49% stake in Yes Bank - investing Rs 7,250-crores. Other banks investing in India's fourth-largest private sector lender are HDFC (Rs 1000 crores ), Axis Bank (Rs 600 crores), Kotak Mahindra Bank (Rs 500 crores), Bandhan Bank (Rs 300 crore), IDFC First  Bank (Rs 250 crores) and Federal Bank (Rs 350 crores).

"I would like to assure depositors their money is completely safe, there is no need for worry, their money is safe and the depositors can withdraw their money from March 18 at 6 PM. RBI has enough liquidity and can provide Yes Bank with liquidity if required. We have the confidence that the plan is sound and will revive the bank," he said.

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Yes Bank crisis

Yes Bank which has been facing a crisis as it accumulated many bad loans in 2018 by lending to corporate defaulters such as DHFL, Jet Airways and Cafe Coffee day, was put on a moratorium by RBI for a period of 30 days, capping its withdrawals at Rs 50,000. The RBI has also announced ‘Yes Bank Ltd. Reconstruction Scheme, 2020’ altering the authorised capital to Rs 5000 crores and 2400 equity shares standing at Rs 10 each. Moreover, SBI which leads the consortium of banks investing in the 'reconstructed bank' will not reduce its holding below 26% before the completion of three years. Yes Bank reported on Saturday a staggering Rs 18,654-crore loss for the December quarter as its gross non-performing assets shot-up to Rs 40,709 crore.