With normal banking services in Yes Bank to resume at 6 pm on Wednesday, the private sector bank's administrator and new investors assure all deposit holders that their savings in the bank are absolutely safe and customers will have a much better experience when they resume usual interaction with the lender.
“There is no need to worry about the safety of deposits in the bank. The bank has emerged stronger with the equity support of domestic banks and quick action by the RBI and the government. So when normal banking services resume tomorrow, customers can expect to get a much better experience,” Prashant Kumar, Yes Bank administrator and the next MD and CEO of the bank’s newly constituted board, told media persons at a press conference.
Responding to questions whether there would be a flurry of withdrawals from the depositors once normal banking services resume on Wednesday, he said that Yes Bank has sufficient funding lines available with it and based on analytics and positive vibes generated by the restructuring scheme, there would not be a flurry of withdrawals.
“Even during the moratorium period, only one-third of depositors withdrew their savings to the extent of Rs 50,000 while the remaining did not withdraw at all. In fact, in last four days, Yes Bank has seen more inflows than outflow,” Kumar said.
Asked if there was a contingency plan to check withdrawal rush, he said he had no reasons to believe why that would happen but even in the event of an eventuality, the bank has sufficient funding lines available to it.
The State Bank of India (SBI), which has become the anchor investor in Yes Bank after if picked up close to 49 per cent stake in the bank, also said that it did not see nervous depositors flocking Yes Bank branches for withdrawals once normal banking services resumed. “There are sufficient funding lines to meet any eventuality. We do not see another moratorium being put in place,” said SBI Chairman Rajnish Kumar.
He added that everyone wanted to lift moratorium on Yes Bank at the earliest given strong presence of SME sector on its portfolio. Longer restrictions would have impacted the segment.
Stocks of the crisis-hit Yes Bank have surged over 60 per cent, a day after Moody’s upgraded its outlook for the bank and the Reserve Bank Governor assured that the bank’s revival plan is credible bank and it may infuse more liquidity if required.
At 11 a.m., shares of Yes Bank were trading at Rs 60.65 per share, higher by Rs 23.55 or 63.48 per cent from its previous close.
Global rating agency Moody’s on Monday upgraded Yes Bank’s ratings and changed the lender’s outlook to positive.
Moody’s Investors Service upgraded the bank’s long-term foreign-currency issuer and foreign currency senior unsecured MTN programme ratings to Caa1 from Caa3 and (P)Caa1 from (P)Caa3 respectively, among other upgrades.
Further, speaking to the media on Monday, Reserve Bank of India (RBI) Governor Shaktikanta Das sought to assure the private bank’s depositors that their hard-earned money is safe as the reconstruction scheme for Yes Bank as credible and sustainable.
He also said that the central bank will infuse additional liquidity into the private lender if required, and urged depositors that there was no need to carry out panic withdrawals after the moratorium on the bank ends on Wednesday (March 18).
A total of seven private banks along with the State Bank of India have so far committed investments into the bank.
Investment by private banks has so far reached Rs 3,950 crore. Among the private players, ICICI Bank and Housing Development Finance Corporation committed Rs 1,000 crore each. Axis Bank and Kotak Mahindra Bank committed to invest Rs 600 crore and Rs 500 crore, respectively.
Both Federal Bank and Bandhan Bank have been allotted shares for Rs 300 crore each as per their commitment and IDFC First Bank has been issued equity shares in the crisis-ridden bank for a consideration of Rs 250 crore.
Further, SBI which would hold 49 per cent stake in the cash-strapped lender has been allotted 605 crore shares for Rs 6,050 crore.
The private sector bank had been put under a moratorium by the Reserve Bank of India since March 5 which has restricted deposit withdrawals up to Rs 50,000 per month. Under the terms of the notified scheme, this moratorium will now be lifted at 6 p.m. on March 18 and the bank will full-fledged operations thereon.
State Bank of India Chairman Rajnish Kumar said that the state-run bank will not sell any of its shares in the crisis-hit Yes Bank in the next three years.
The SBI has been allotted 605 crore shares in Yes Bank for an investment of Rs 6,050 crore and would be the largest shareholder in the restructured bank with a stake of 49 per cent.
Its statement gains significance as the reconstruction plan for Yes Bank said that the largest public sector bank will have to hold at least 26 per cent stake for the next three years. Concerns of a possible profiteering by the investing banks have arisen as the prevailing share price of Yes Bank is nearly six times the price at which the domestic banks have subscribed to its shares. Yes Bank shares closed at Rs 58.65 apiece on BSE on Tuesday.
Rajnish Kumar on Tuesday said that although he cannot talk about other banks, regarding SBI, “not even a single share will be sold in three years”.
Other private sector banks who have put in a total of Rs 3,950 crore so far, would have to hold at least 75 per cent of their investment for a three year period under the terms of restructuring scheme.
Even if such entities want to sell the 25 per cent of their investment now, which they are free to execute under the scheme, they would end up not only recovering their entire investment but also making windfall gains.
Among the private players, ICICI Bank and Housing Development Finance Corporation committed Rs 1,000 crore each. Axis Bank and Kotak Mahindra Bank committed to invest Rs 600 crore and Rs 500 crore, respectively. Both Federal Bank and Bandhan Bank have been allotted shares for Rs 300 crore each as per their commitment and IDFC First Bank has been issued equity shares in the crisis-ridden bank for a consideration of Rs 250 crore.
Rajnish Kumar said that it was decided that two-stage funding should be carried out for Yes Bank as trying to raise the total required capital in one go would have extended the moratorium on the private sector lender.
“Enough money was available, but in the first stage (it was decided) let it be within Indian domestic bankers. A lot of foreign investors had interest… but that would mean longer moratorium,” he said.
As the bank has already raised Rs 10,000 crore, it has now adequate space to complete the second stage funding by bringing in more investors. (IANS)