The State Bank of India (SBI) board has given the largest lender an “in-principle” approval to invest in the capital-starved Yes Bank, hours after the private bank was placed under a moratorium by RBI, which also capped deposit withdrawals at Rs 50,000 per account for a month.On Thursday, the central board of SBI discussed the matter at a meeting and later informed the exchanges. “The matter in regard to Yes Bank was discussed at the meeting of the central board of bank on Thursday and an in-principle approval has been given by the board to explore investment opportunity in the bank,” the SBI board informed the bourses late in the evening.
The government has reportedly asked SBI and life insurance behemoth LIC to collectively pick up a 49 per cent stake in Yes Bank.
The SBI, however, denied that any negotiations took place to acquire equity in Yes Bank, while responding to queries from the bourses, an IANS report said. Replying to a question on negotiations held with Yes Bank and from when SBI stated that no such negotiations took place.
The SBI is quoted as saying, “However, the matter in regard to Yes Bank was discussed at the meeting of the Central Board of the Bank on March 5 and an in-principle has been given by the Board to explore investment opportunity in the Bank”.
SBI further stated that it was not aware of any information not disclosed to the exchanges that may have led to the movement in trading.
Earlier this year, SBI chairman Rajnish Kumar said that Yes Bank, which had over Rs 2 lakh crore in deposits as of September, will not be allowed to go down, while speaking in Davos, Switzerland.
Kumar also appreciated the bank’s investments in technology and said that the bank has a strong brand. He had suggested that Yes Bank’s rival Kotak Mahindra Bank is best placed to take over the lender.
Meanwhile, reports of takeover led to a 25 per cent jump in Yes Bank in trading on Thursday, while the SBI scrip closed 1.05 per cent up at Rs 288.30 apiece at the end of the trade.
Share prices of cash-strapped Yes Bank are expected to witness a sharp downturn today as the Reserve Bank of India has superseded its Board of Directors for a period of 30 days owing to a serious deterioration in the financial position of the bank.