Rs 50,000 cap on Yes Bank withdrawals to go 'much much much' before Apr 3: SBI chairman

Rs 50,000 cap on Yes Bank withdrawals to go 'much much much' before Apr 3: SBI chairman

Yes Bank needs between Rs 20,000 - 22,000 crore to revive. SBI's risks will be ring-fenced with maximum exposure of Rs 10,000 crore. Yes Bank will not be merged with SBI but will remain an associate bank

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State Bank of India Chairman Rajnish KumarState Bank of India Chairman Rajnish Kumar
Rajeev Dubey
  • Mar 8, 2020,
  • Updated Mar 9, 2020 5:05 PM IST

Yes Bank will need between Rs 20,000 - 22,000 crore to revive. SBI's risks will be ring-fenced with maximum exposure of Rs 10,000 crore. But most importantly, the Rs 50,000 cap on withdrawals for Yes Bank customers will be lifted well before the April 3 deadline-perhaps, as quickly as next week. Those are some of the assurances SBI chairman chairman Rajnish Kumar had for the worried Yes Bank and SBI depositors and shareholders in an exclusive interview to India Today TV. "The moratorium will be lifted much, much, much before 3rd April," Kumar said.

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Kumar's assurance will come as a huge relief for Yes Bank accountholders who have been worried that the withdrawal cap may prolong for as long as PMC Bank whose depositors still cannot withdraw more than Rs 1 lakh.

Aware of the possible risks to SBI of an acquisition where the quality of debt still remains a question mark, Kumar was cautious in calling it a strategic investment instead of an acquisition. Yes Bank will continue as a separate board-run entity and will not be merged with SBI. It will be an SBI associate bank instead. "It is a strategic investment decision by State Bank of India where as per the draft scheme which has been circulated and put in public domain by Reserve Bank of India the boundaries for this investment have been set. What it does say is that State Bank of India will invest minimum 26% that will be locked in for 3 years," says Kumar.

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Kumar also assured SBI shareholders and depositors that risks for India's largest bank will be limited to its Rs 10,000 crore commitment, at best. In fact, he said, given the investor interest SBI may not be required to even put in that quantum of investment.

How bad is Yes Bank's loan book? With 7.39 pc of declared NPAs in the Rs 2.3 lakh crore loan book and another Rs 70,000 to Rs 80,000 crore being watched closely in default or negative grade ratings, could there be more skeletons in the Yes Bank cupboard? "Yes Bank will be declaring their (Q3 results held up since December) results on 14th of March. When these Investors, including SBI, will make this investment, they will make this investment by keeping their eyes and ears open," says Kumar.

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However, there's bitter sweet news for Yes Bank shareholders. Investors who have seen the value of the bank's marketcap plunge from Rs 90,835 crore on 20 August, 2018 to barely Rs 4,132 crore at close of trading on Friday March, 6 will see their holding halve from over 90 pc when SBI and its consortium of investors brings in 49 pc of fresh equity. It will erode the share price from a peak of around Rs 1,400 per share to close to Rs 10 per share SBI and other investors will be paying. However, with India's largest bank now backing their bank, they can look forward to better days ahead as Yes Bank's performance improves.

Here's the full transcript of the interview:

I think your assurance to the depositors and to the investors is not that great news for investors, but definitely for depositors will, I think, really soothe a lot of nerve. Thank you for talking to India Today TV.

Yes Bank will need between Rs 20,000 - 22,000 crore to revive. SBI's risks will be ring-fenced with maximum exposure of Rs 10,000 crore. But most importantly, the Rs 50,000 cap on withdrawals for Yes Bank customers will be lifted well before the April 3 deadline-perhaps, as quickly as next week. Those are some of the assurances SBI chairman chairman Rajnish Kumar had for the worried Yes Bank and SBI depositors and shareholders in an exclusive interview to India Today TV. "The moratorium will be lifted much, much, much before 3rd April," Kumar said.

Advertisement

Kumar's assurance will come as a huge relief for Yes Bank accountholders who have been worried that the withdrawal cap may prolong for as long as PMC Bank whose depositors still cannot withdraw more than Rs 1 lakh.

Aware of the possible risks to SBI of an acquisition where the quality of debt still remains a question mark, Kumar was cautious in calling it a strategic investment instead of an acquisition. Yes Bank will continue as a separate board-run entity and will not be merged with SBI. It will be an SBI associate bank instead. "It is a strategic investment decision by State Bank of India where as per the draft scheme which has been circulated and put in public domain by Reserve Bank of India the boundaries for this investment have been set. What it does say is that State Bank of India will invest minimum 26% that will be locked in for 3 years," says Kumar.

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Kumar also assured SBI shareholders and depositors that risks for India's largest bank will be limited to its Rs 10,000 crore commitment, at best. In fact, he said, given the investor interest SBI may not be required to even put in that quantum of investment.

How bad is Yes Bank's loan book? With 7.39 pc of declared NPAs in the Rs 2.3 lakh crore loan book and another Rs 70,000 to Rs 80,000 crore being watched closely in default or negative grade ratings, could there be more skeletons in the Yes Bank cupboard? "Yes Bank will be declaring their (Q3 results held up since December) results on 14th of March. When these Investors, including SBI, will make this investment, they will make this investment by keeping their eyes and ears open," says Kumar.

Advertisement

However, there's bitter sweet news for Yes Bank shareholders. Investors who have seen the value of the bank's marketcap plunge from Rs 90,835 crore on 20 August, 2018 to barely Rs 4,132 crore at close of trading on Friday March, 6 will see their holding halve from over 90 pc when SBI and its consortium of investors brings in 49 pc of fresh equity. It will erode the share price from a peak of around Rs 1,400 per share to close to Rs 10 per share SBI and other investors will be paying. However, with India's largest bank now backing their bank, they can look forward to better days ahead as Yes Bank's performance improves.

Here's the full transcript of the interview:

I think your assurance to the depositors and to the investors is not that great news for investors, but definitely for depositors will, I think, really soothe a lot of nerve. Thank you for talking to India Today TV.

Read more!
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