The government has notified the reconstruction scheme for crisis-hit Yes Bank, according to which the r estrictions on withdrawals from its accounts will be lifted in “three working days” or on March 18.
The Union Cabinet on Friday approved the reconstruction scheme for the bank as proposed by the Reserve Bank of India (RBI), under which the State Bank of India (SBI) will acquire 49% stake in the ailing bank. Four private sector lenders, including ICICI Bank, HDFC Bank, Axis Bank and Kotak Mahindra Bank, will also be picking up stake in the bank.
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Prior to this, on March 5, the RBI placed Yes Bank under a moratorium, restricting withdrawals to ₹50,000 per depositor till April 3. It had also superseded the board and placed it under an administrator, Prashant Kumar, former deputy managing director and CFO of SBI.
“The order of moratorium on the reconstructed bank issued by the Government of India...shall cease to have effect on the third working day at 18:00 hours from the date of commencement of this Scheme,” the notification, issued late on Friday night said, adding that the ‘Yes Bank Reconstruction Scheme 2020’ will come into force on March 13, 2020.
Under the scheme, Mr Kumar has been appointed as the Chief Executive Officer and Managing Director of the Bank, with Sunil Mehta, former Non-Executive Chairman of Punjab National Bank as Non Executive Chairman, and Mahesh Krishnamurthy and Atul Bheda as Non-Executive Director. The new board will be formed within seven days from cessation of the moratorium.
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Additionally, SBI will nominate two officers as Directors and the RBI may also appoint one or more persons as additional directors.
The notification states that all employees of the reconstructed bank will continue working with the same remuneration and on the same terms and conditions of service “for a minimum period of one year...provided that the Board of Directors...shall, for reasons to be recorded in writing and after following the due procedure, discontinue the services of the key managerial personnel at any time as it deems necessary.”
It also adds that existing shareholders holding over 100 shares in Yes Bank are subject to a three-year ‘lock-in’ for 75% of their investment. “There shall be a lock-in period of three years from the commencement of this Scheme to the extent of seventy-five per cent in respect of–– (a) shares held by existing shareholders on the date of such commencement; (b) shares allotted to the investors under this Scheme: Provided that the said lock-in period shall not apply to any shareholder holding less than one hundred shares.”
