SBI set to buy 49 percent stake in stressed YES Bank: will ensure its financial stability, says SBI Chainman Rajnish Kumar
India’s largest lender Stata Bank of India will buy 49 per cent stake in the Mumbai headquartered YES Bank but will desist from interfering in its day-to-day functioning. Making an announcement on Saturday, March 07, SBI Chairman Rajnish Kumar assured the YES Bank’s depositors that their monies are safe adding that there is “no plans to merge the two banks” The 49 percent investment is the upper limit. SBI would ensure the resolution plan is approved and implemented much before the Reserve Bank of India’s (RBI) 30-day period. “Only requirement is the lock of 26 percent for three years. SBI has received the RBI’s plan and its internal investment and legal teams are doing due diligence after which the bank will respond to RBI with its comments on March 9. The 26 percent stake is the “lock-in requirement”. “Once Yes Bank is out of moratorium, it will be run by a professional team. The intention is not to get involved in day-to-day functioning. Yes Bank can be quickly brought out of RBI administration and once this is done, SBI will keep it at not one, but two-arm’s length.” There would be no conflict of interest and that the moratorium limit of Rs 50,000 withdrawal is a short-term pain, while customers money is “completely safe”, the SBI Chief added. Queried about other investors, Kumar said they expect many co-investors for Yes Bank. Commenting on the YES Bank crisis, HDFC Chairman Deepak Parekh said panic in the market over Yes Bank is unnecessary, overreaction. The public is reacting as if this is the end of the world. It is a temporary overreaction, which is unnecessary. Panic in the market to the moratorium is completely an overreaction,” Parekh told CNBC-TV18. He said the problem is bank-specific and not sectoral. Stating that our financial system is strong. “One company going under or having temporary problems due to lack of capital cannot destroy the system.” RBI has taken a timely call and that the central bank has the right to “do whatever it needs to do to protect depositors”.