The government has approved the reconstruction scheme for Yes Bank with many leading banks participating in the revival effort including the country’s top public sector bank, State Bank of India (SBI).
As part of the reconstruction measures, Yes Bank administrator Prashant Kumar, who is SBI’s former CFO, took a number of measures. The authorized share capital of the bank was increased to ₹620 billion (US$4.8 billion) from ₹110 billion, while the number of equity shares was increased to 30 billion from 4.5 billion. The authorized preference share capital of the bank continues to be ₹2 billion, while 75% of the equity shares allotted to investors will be subject to a lock-in for a period of three years from March 2020.
“This is a landmark event, given it is the first time a private bank has been reconstructed by the Reserve Bank of India under section 45 of the Banking Regulation Act, 1949,” Rinki Ganguli, a partner at AZB & Partners, told India Business Law Journal. The section refers to the reserve bank’s application to the government for the suspension of a banking business and to prepare a scheme of amalgamation.
AZB & Partners advised Yes Bank and the firm “advised on all aspects of the scheme – providing comments to the draft scheme, discussions with stakeholders, and implementation from a compliance and regulatory point of view,” said Ganguli. AZB was also represented by partners Varoon Chandra, Anand Shah, Hufriz Wadia and Nikunj Maheshwari.
Meanwhile, Sunil Mehta, former non-executive chairman of Punjab National Bank, has been appointed as non- executive chairman of Yes Bank. Mahesh Krishnamurthy and Atul Bheda were appointed as non-executive directors to Yes Bank’s board. SBI will also have the right to nominate two directors to the bank’s board of directors.