The Government of India has reportedly approved the draft reconstruction plan for troubled lender Yes Bank.

The draft scheme was proposed last week by the Reserve Bank of India (RBI) after placing the cash-starved bank under moratorium.

Yes Bank operates over 1,000 branches across all 29 states in India.

As per the draft plan, the strategic investor in the bank – which happens to be State Bank of India (SBI) – would acquire a 49% stake in Yes Bank.

Yesterday, SBI said it received approval from its Executive Committee of Central Board (ECCB) to buy stake worth INR72.5bn ($974.5m) in Yes Bank.

SBI will purchase 7.25 billion shares in India’s fifth-largest private sector lender at INR10 per share.

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However, as per the draft scheme, SBI will not slash its stake in Yes Bank to less 26% before completing three years from the date of capital infusion.

According to The Times of India, apart from SBI by private sector banks such as ICICI Bank, HDFC Bank, Axis Bank and Kotak Mahindra Bank will also acquire a stake in Yes Bank.

They will also be joined by private investors including Radhakishan Damani, Rakesh Jhunjhunwala, and the Azim Premji Trust.

Together, these investors are expected to invest more than INR120bn ($1.6bn) in Yes Bank, three people familiar with the development told the publication.

The new board of Yes Bank, according to the draft plan, will have at least two members nominated by SBI.

Yes Bank’s administration will be taken over by the new board within seven days of the issuance of notification.

Furthermore, SBI has recommended the name of Yes Bank administrator Prashant Kumar for the role of new CEO of the bank.

Yes Bank is slated to announce its financial results for the third quarter ended 31 December 2019 on March 14. This will give a clear idea about the financial position of Yes Bank.