Money & Banking

YES Bank retail investors too face three-year lock-in

K Ram Kumar Mumbai | Updated on March 14, 2020 Published on March 14, 2020

However, the said lock-in period will not apply to any shareholder holding less than 100 shares.

It is not just the new institutional investors of the troubled YES Bank who will have a lock-in period of three years on their investments, existing shareholders,except for those owning less than 100 shares, too will be subject to the lock-in.

As per the “YES Bank Limited Reconstruction Scheme, 2020”, which has come into force from March 13, 2020, there will be a lock-in period of three years from the commencement of this Scheme to the extent of 75 per cent in respect of –– shares held by existing shareholders; and shares allotted to the investors under this Scheme.

However, the said lock-in period will not apply to any shareholder holding less than 100 shares.

This clause in the Scheme will prevent the exit of retail investors who hold more than 100 shares in Yes Bank.

So far,YES Bank has received investment commitments aggregating Rs 10,650 crore from the Indian financial system -- State Bank of India was the first to commit Rs 7,250 crore, followed by ICICI Bank and HDFC (Rs 1,000 crore each), Axis Bank (Rs 600 crore) and Kotak Mahindra Bank (Rs 500 crore) and Bandhan Bank (Rs 300 crore).

As per the Scheme, the order of moratorium on the reconstructed bank issued by the Government of India in the Ministry of Finance, Department of Financial Services via a notification on March 5, 2020, will cease to have effect on the third working day (March 18) at 6 pm from the date of commencement of this Scheme.

The office of the Administrator of the reconstructed bank, appointed by the Reserve Bank of India, will stand vacated immediately after seven calendar days from the date of cessation of moratorium and a new Board of Directors will be reconstituted.

YES Bank Board of Directors

The Board of Directors will comprise of Prashant Kumar, former Chief Financial Officer and Deputy Managing Director of State Bank of India, as Chief Executive Officer and Managing Director; Sunil Mehta, former Non-Executive Chairman of Punjab National Bank, as Non-Executive Chairman; Mahesh Krishnamurthy as Non-Executive Director; Atul Bheda as Non-Executive Director.

The investor bank can nominate two officers as Directors in addition to the members appointed. The Reserve Bank of India may appoint one or more persons as additional directors as it may consider necessary.

Any investor who is permitted to have voting right of 15 per cent will have the right to nominate one director on the Board.

The notification referred to the rapidly deteriorating financial position of YES Bankrelating to liquidity, capital and other critical parameters, and the absence of any credible plan for infusion of capital.

This necessitated the RBI to take immediate action in the public interest and particularly in the interest of the depositors and accordingly, YES Bankwas placed under moratorium by an order of the Government of India through a notification on March 5, 2020 in exercise of the powers conferred by the Banking Regulation Act, 1949.

Published on March 14, 2020
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