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Finance

ICICI, Axis, Kotak Mahindra banks and HDFC confirm stake buy in Yes Bank

Updated : March 13, 2020 06:51 PM IST

HDFC Bank, ICICI, Bank and Axis Bank today said they will invest Rs 1,000 crore, Rs 1,000 crore and Rs 600 crore, respectively, in Yes Bank

Earlier today, Finance Minister Nirmala Sitharaman announced that the Cabinet had approved Yes Bank's reconstruction scheme.

The FM said that the withdrawal limit on Yes Bank depositors will be lifted three days after the notification of the scheme is issued.

Top private sector lenders ICICI Bank and HDFC today said they will invest Rs 1,000 crore each in Yes Bank while Axis Bank and Kotak Mahindra Bank announced investments of Rs 600 crore and Rs 500 crore, respectively.

The announcements come soon after FM Sitharaman said the Cabinet had approved the RBI’s reconstruction scheme for Yes Bank.

All the private-sector lenders will buy Yes Bank shares at Rs 10 each.

The investment, which was first reported by CNBC Awaaz, is part of an RBI-drafted rescue plan in which SBI will take the lead by buying up to 49 percent in Yes Bank.

Other investors, including billionaires Rakesh Jhunjhunwala and RK Damani, are also tipped to be among the investors.

On March 5, the government imposed a moratorium on Yes Bank depositors, capping withdrawals above Rs 50,000 while RBI superseded Yes Bank's board, following a deterioration in the bank's finances and failure by its erstwhile management to raise funds in time.

Sitharaman added that the moratorium would be lifted three days after the reconstruction scheme is notified.

The rescue plan drawn up by the RBI would ensure that a clutch of India's top banks would end up holding stake in Yes Bank, which itself is India's fifth-largest private sector bank, with a book of about Rs 2.3 lakh crore.

Analysts said that the show of confidence by other top banks would help prevent large scale withdrawals by Yes Bank depositors when the withdrawal cap is removed next week.

The FM today announced that all investors except SBI will have a lock-in of three years for 75 percent of their investment.

Yes Bank is slated to declare its quarterly results tomorrow, during which it will likely disclose details of other investments.

Yes Bank stock, which fell from Rs 36 to a low of Rs 5.95 after the moratorium was announced, has recovered to about Rs 25 since. It closed 2 percent higher in volatile trading today.

Update: The article has been updated with subsequent announcements by Axis Bank, Kotak Mahindra and HDFC.

Correction: A previous version of this article said that the HDFC Bank will be investing in Yes Bank, instead of HDFC. The error has been corrected.

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