The State Bank of India (SBI) has agreed to invest up to INR17.60bn ($234m) in Yes Bank’s upcoming follow-on public offer (FPO), Livemint has reported.

The move comes after the Yes Bank received approval from the Capital Raising Committee (CRC) of its board for raising funds via FPO.

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In a statement to the stock exchanges, SBI said: “Pursuant to the intimation given by Yes Bank to the stock exchanges on 07 July 2020 on the issue of raising capital, the executive committee of the central board (ECCB) of State Bank of India at its meeting held today 8 July 2020 has accorded approval for a maximum investment of up to INR17.60bn in the further public offering of Yes Bank.”

Yes Bank was recently bailed out by State Bank of India (SBI)-led consortium under a rescue plan announced by the Indian government.

SBI, HDFC, ICICI Bank, Kotak Mahindra Bank, Bandhan Bank, Federal Bank and IDFC First Bank invested INR100bn into Yes Bank.

SBI acquired a 48.2% stake in Yes Bank by leading the rescue plan with INR60.5bn capital infusion.

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Yes Bank is now preparing for its previously announced follow-on public offer (FPO) worth INR150bn, which is scheduled for launch in mid-July.

The fundraiser will help the cash-starved bank increase its capital adequacy ratio which currently stands at 8.5%, the report added.

According to Livemint, the fundraising is critical for Yes Bank despite raising INR100bn from financial institutions and INR63bn in gains from the sale of additional tier I (AT1) bonds.

Its common equity tier I (CET1) ratio was 6.3% and Tier II ratio was at 2% after the bank received the capital infusion from private and public sector lenders.

Yes Bank CEO Prashant Kumar said that “it would be desirable to raise the money in the first quarter of FY21” adding that “if the bank raises INR150bn, there is no need to come back to the market for three years.”