Cabinet approves reconstruction scheme for cash-strapped YES Bank

Finance minister Nirmala Sitharaman said on Friday, the union cabinet has approved the scheme e of reconstruction of YES bank and also lifted the moratorium within three days after the notification is issued. By giving details, Nirmala Sitharaman told state bank of India will invest for 49 per cent equity in yes bank and there are no restriction for other investors they are also invited for the investment.

She also mentioned, there will be a three year lock period for all the investors. Moreover the lock in period for SBI would be only for the 26 per cent of the shareholding.

The finance minister said that the authorized capital of the SBI has been increased from 1100 crore to 6200 crore. She also added that the scheme has been approved with the objective of protecting the interest of the depositors and providing credibility to YES bank as well as to the entire financial system

Along with that finance minister also added when the board is constituted two members are SBI directors and after the notification to lift the moratorium the administrator will vacate his office.

SBI said that they will invest 7250 crore in YES bank which is much higher than they decided. Earlier they had planned 2450 crore as investment and acquire 49 per cent stake in the private sector lender that began operation in 2004.

On March 5, RBI had imposed a moratorium on YES bank restricting withdrawals to Rs 50000 per depositor till April 3. The RBI also superseded the board and placed it under an administrator, Prashanth Kumar, former deputy managing director and CFO of SBI. The proposal which were made to hike the dearness allowance by 4 per cent. Minister Prakash javadekar said that 48 lakh employees and 63 lakh pensioners of central government will be benefitted as the cabinet approved increasing dearness allowance by 4 per cent.