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Yes Bank: Govt issues notification for restructuring, withdrawal limit to be removed from Mar 18

New Delhi, Mar 14 (GCCurrentAffairs) The Union government has issued a notification late last night regarding the restructuring of Yes Bank Limited, the fourth largest private sector bank, which will remove the ban on withdrawals from the bank at 1800 hrs on Wednesday.
The notification was issued under the Banking Regulation Act 1949 and a new board of directors has been formed for the bank.
Prashant Kumar, former Chief Financial Officer and Deputy Management Director of State Bank of India, has been appointed as Chief Executive Officer and Managing Director of the reconstituted Yes Bank.
Sunil Mehta, former non-executive chairman of Punjab National Bank, has been appointed as non-executive chairman of the bank.
Mahesh Krishna Murthy and Atul Bheda have been made Executive Directors and the Reserve Bank of India may appoint one or more persons as Additional Directors.
The reconstituted bank will meet all the past liabilities of Yes Bank and all the deposits and liabilities with the bank, the rights of the debtors will remain completely unaffected, the government said.
All employees of the bank will continue to receive salary allowance for at least one year as before.
According to the notification, the ban on withdrawals from Yes Bank will be removed in three working days and the administrator appointed for the bank will vacate the office in seven days.
In this way, the ban on withdrawal will end from 1800 hrs on Wednesday. The restructured bank’s authorised capital will be Rs 6200 crore and its share will be valued at Rs 2. The authorised share capital will remain at Rs 200 crore.
The restructuring plan was approved at a cabinet meeting chaired by Prime Minister Narendra Modi on Friday.
Finance Minister Nirmala Sitharaman had said that State Bank of India would take a 49 percent stake in it and would have two members on its board of directors. And it will not be able to disinvest 26 per cent stake in its investment for three years. For other investors, this limit is 75 per cent and three years.
She had said that on March 5, the Reserve Bank had dissolved the board of directors of Yes Bank and appointed an administrator for it.
The format for the restructuring plan was released on March 6 and it was finalised after the response that has been approved.
The Reserve Bank had restricted the bank and set a withdrawal limit of Rs 50,000 for customers.
This restriction is for 30 days but as the government has issued notification for the restructuring plan, the ban will be lifted in three working days.
According to the investment proposal submitted by the State Bank of India to the government, Rs 11,000 crore will be invested in the reconstituted Yes Bank, in which SBI will invest Rs 7250 crore.
With this, the four major private sector financial companies -HDFC Ltd and ICICI Bank- will invest Rs 1,000 crore each, while Axis Bank will invest Rs 600 crore and Kotak Mahindra Bank will invest Rs 500 crore.
There is a talk of Life Insurance Corporation of India (LIC) to invest in it too, but the amount that it will invest is not yet clear but it will invest only on the basis of the approval of the Board of Directors.

Source
Via UNI-India

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