SBI will have to put in capital to end the moratorium, says Prashant Kumar
The move will come as a relief to depositors facing restrictions on withdrawals
The moratorium on private lender Yes Bank could end as early as Saturday, but State Bank of India (SBI) will have to put in capital for these curbs to be lifted, Prashant Kumar, the administrator appointed by the Reserve Bank of India (RBI), said over the phone on Monday.
“We are working out a fast resolution mechanism and the moratorium might be lifted as early as Saturday. SBI needs to put in the money first and then the moratorium would end," said Kumar, former deputy managing director and chief financial officer of SBI.
The move will come as a relief to depositors facing restrictions on withdrawals. Following the moratorium, multiple banking channels of Yes Bank, including automatic teller machines, internet banking and unified payments interface, had crashed on Friday.
SBI chairman Rajnish Kumar on Saturday said the survival of Yes Bank was critical for the financial system and the state-owned lender will invest ₹2,450 crore immediately, which can later go up to over ₹10,000 crore depending on due diligence and final valuation, to pick up a 49% stake in Yes Bank.
On 6 March, the central bank announced a draft rescue plan for Yes Bank, saying that SBI had expressed willingness to invest in the troubled private sector lender.
The draft was released a day after RBI imposed a moratorium on Yes Bank, restricting withdrawals to ₹50,000 per depositor till 3 April.
The central bank also superseded the board of the private sector lender.
According to the draft reconstruction scheme, Yes Bank’s authorized capital will be increased from ₹600 crore to ₹5,000 crore and paid-up capital will be enhanced to ₹4,800 crore, comprising 24 billion shares of ₹2 face value. This will be effective from the day the central government notifies the scheme in the gazette.
RBI on Sunday assured Yes Bank depositors that their money was safe.
“Concern has been raised in certain sections of the media about safety of deposits of certain banks. This concern is based on analysis, which is flawed. Solvency of banks is internationally based on capital to risk weighted assets and not on market cap," RBI’s official handle tweeted.
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