Mumbai, March (IANS) HDFC Bank and Kotak Mahindra Bank joined the private banks which have come to the rescue of the crisis-hit Yes Bank. HDFC Bank on Friday said that its board has approved an investment of Rs 1,000 crore in Yes Bank and Kotak Mahindra Bank also committed an investment of Rs 500 crore investment."
The board of directors of the corporation at its meeting held today approved entering into an equity commitment letter agreement in relation to investment in Yes bank. This investment is likely to result in the corporation holding in excess of 5 per cent shareholding in Yes Bank, HDFC Bank said in a regulatory filing.
It will acquire 100 crore equity shares for Rs 10. The bank further said that the investment will be completed by March 31.
Separately, Kotak Mahindra Bank confirmed that it will invest Rs 500 crore in Yes Bank to acquire 50 crore shares. "The bank has issued an equity commitment letter to invest Rs 500,00,00,000 (the equity commitment) in Yes Bank Limited for subscription of 50,00,00,000 equity shares of Yes Bank at a price of Rs 10 per equity share," it said.
Earlier ICICI Bank and Axis Bank announced investments of Rs 1,000 crore and Rs 500 crore respectively. State Bank of India's board has already approved 49 per cent stake purchase in Yes Bank, as per the RBI's reconstruction scheme for the bank. It had said on Thursday that an investment of Rs 7,250 crore would be made in Yes bank to pick up 725 crore equity shares.
On Friday, the Union Cabinet approved the Reserve Bank-proposed reconstruction plan for Yes Bank, under which the State Bank along with other private investors would pump in equity. The details of the scheme is expected to come once the government notifies the scheme.
According to Finance Minister Nirmala Sitharaman, the Cabinet decided that the SBI will hold at least 26 per cent stake in the private bank for a minimum period of three years. Similarly, the other investors will also be mandated to have a similar lock-in period for 75 per cent of their investment in the bank.
The authorised share capital of the Yes Bank will be revised upwards from Rs 1,100 crore to Rs 6,200 crore. Besides, Sitharaman indicated that the details of the scheme will be notified soon. She further said that Yes Bank's moratorium will be lifted at 1600 hours, after three working days of the scheme being notified.
The office of the administrator shall also stand vacated after seven days from the cessation of moratorium and the new Board will take over the bank.
Last week, the RBI placed Yes Bank under moratorium and capped the withdrawal limit at Rs 50,000 till April 3, due to deteriorating financial health of the bank. The central bank also superseded Yes Bank's board of directors and appointed former SBI CFO Prashant Kumar as its administrator.