Photo has been used for illustrative purposes.
India’s cabinet has approved a rescue plan for Yes Bank, the finance minister said on Friday, as authorities look to prevent a broader banking crisis. The state-owned State Bank of India (SBI), the country’s largest lender, will take a 49% stake in Yes Bank, Finance Minister Nirmala Sitharaman said.
ICICI Bank also said it would invest up to 10 billion rupees ($135 million) for a 5% stake in Yes Bank, which is India’s fifth-largest private lender.
Axis Bank will also invest up to 6 billion rupees, it said in a regulatory filing.
“The decision to provide a reconstruction scheme keeps at its core the protection of depositors’ interest, keeps at its core providing stability to Yes Bank and also keeps at its core keeping a stable financial environment and banking system,” Sitharaman told reporters in New Delhi.
This month, India placed Yes Bank under a moratorium because of a serious deterioration in its financial position.
The moratorium, a move to reassure depositors by handing control to the central bank, would be lifted within three days once a government notification is issued, the minister said.
She did not give a precise timeline.
Private investors that join the rescue deal will need to maintain at least 75% of their investments for a minimum of three years, she said.
SBI, which had said it would invest 72.50 billion rupees ($977 million), will not be allowed to reduce its stake to below 26% for at least three years, Sitharaman added.
Reuters