YES Bank: SBI will pick up 245 cr shares worth Rs 2,450 cr

New Delhi: The SBI (State Bank of India) said on Saturday that it will be issued 245-crore shares at a price of Rs 10 each for Rs 2,450 crore in YES Bank. The shares will translate into SBI picking up a 49 percent stake in the bank.

SBI says YES Bank will have CEO, MD, non-executive Chairman

In an official statement, the SBI said that it will not reduce its holding below 26 percent before the completion of three years from the date of infusion of capital. It also said that the new board of the private lender will have CEO and MD, non-executive chairman and non-executive directors.

"All the employees of the reconstructed bank shall continue in its service with the same remuneration and on the same terms and conditions… at least for a period of one year," SBI said.

The backdrop

YES Bank shares slumped 85 percent on March 6, marking the biggest intraday fall ever, after the RBI (Reserve Bank of India) superseded the board and imposed a month-long moratorium on March 5. The Central bank has also imposed a limit on cash withdrawals from the bank and has said that customers cannot withdraw more than Rs 50,000 in the next month.

This is the first time that the Central bank has acted against a big bank since 2004 when it got government-owned Oriental Bank of Commerce (OBC) to acquire Global Trust Bank in order to rescue the private sector lender. The RBI said that it was prompted to supersede the board because of lax governance practices at YES Bank. "In the absence of a credible revival plan, and in the public interest and the interest of the bank's depositors, (the RBI) had no alternative but to apply to the central government for imposing a moratorium," the Central bank said.