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RBI announced draft scheme “Yes Bank Ltd. Reconstruction Scheme, 2020” for Yes Bank’s revival; SBI willing to invest

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A day after Yes Bank Ltd. placed under moratorium which will be effective upto April 3, 2020, on March 6, 2020, Reserve Bank of India (RBI) after exercising its powers conferred under sub-section (4) of section 45 of the Banking Regulation Act, 1949, has issued a draft scheme of reconstruction of the Yes Bank. It should be noted that State Bank of India (SBI) wants to invest in Yes Bank and also to participate in its reconstruction scheme. SBI can invest for up to 49% stake for nearly Rs 2,450 crore. Here are the key points from draft scheme titled “Yes Bank Ltd. Reconstruction Scheme, 2020”:RBI announces Scheme-RBI plans to alter the authorised capital for the reconstituted bank to Rs 5,000 crore and number of equity shares will also be altered to 24,000 crore of Rs 2 each aggregating to Rs 48,000 crore.

-The Investor bank or SBI should invest in the equity of the Yes Bank  to the extent that post infusion it holds 49% shareholding in the Yes Bank at a price not less than Rs.10/-.

-The Investor bank shall not reduce its holding below 26% before completion of three years from the date of infusion of the capital.

-There will be Alteration in Articles of Association (AoA) of Yes Bank i.e. Article 110(b), Article 127 (b), Article 127A (a), and Article 127A (b) will be deleted after the scheme will come into effect.

-A new Board of Yes Bank or Reconstructed bank will be created by RBI should include two nominee directors from investor bank.

-All the employees of Yes bank shall continue with the same remuneration and on the same terms and conditions of service (T&C) for at least one year. However, the new Board has the freedom to discontinue the services of the Key Managerial Personnel (KMPs) at any point of time after following the due procedure.

-It will be upto Yes bank to open new offices and branches or close down existing offices or branches.

About YES Bank:
Establishment– 2004
Headquarter– Mumbai, Maharashtra
Tagline– Experience our Expertise

About Reserve Bank of India (RBI):
Headquarters– Mumbai, Maharashtra
Formation– 1 April 1935
Governor– Shaktikanta Das
Deputy Governors– 4 (Bibhu Prasad Kanungo, N S Vishwanathan (will retire on March 31, 2020), Mahesh Kumar Jain, Michael Debabrata Patra)