A plan to bailout India’s fifth-largest private sector lender Yes Bank has reportedly been finalised by the country’s central bank.
Yes Bank, which operates over 1,000 branches across all 29 states in India, was put under moratorium last week by the Reserve Bank of India (RBI).
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To make sure that there is no liquidity concern on lifting the moratorium, the plan conceived by the RBI includes not just capital but also funding lines, The Times of India has reported.
It is expected that the central bank will soon make public specific investments that State Bank of India (SBI) and other banks will make to bailout Yes Bank.
Names of the other banks that could participate in the equity infusion were not divulged by the RBI.
However, major private sector banks including ICICI Bank, HDFC, and Kotak Bank have been approached to place short-term deposits to bailout Yes Bank, the report says.
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By GlobalDataThe SBI, the country’s largest public sector bank, is expected inject INR24bn ($324m) capital to acquire a 49% stake in the troubled lender.
The report claims that the banks will inject INR200bn ($2.7bn) into the equity base of Yes Bank within 24 hours of the announcement.
The next day, approximately INR300bn ($4.06bn) will be invested into certificates of deposits of the bank by public sector banks.
The process will culminate with the moratorium being lifted the next day.
According to the publication, the revival plan could be made public anytime following the receipt of confirmation from the investing banks.
The report boosted Yes Bank bank’s shares price which are currently trading at INR28 in the BSE, a surge of 28% over its previous close.
