Last night when the Yes Bank crisis unfolded, thousands of panic-stricken customers flocked to ATM outlets across India to withdraw their money from various Yes Bank branches. Now, the apex bank has put out a draft reconstruction scheme 2020.
In this draft, it is mentioned that the State Bank of India shall agree to invest in the equity of the reconstructed bank to the extent that post-infusion, it holds 49 per cent shareholding in the reconstructed bank at a price not less than Rs.10 (Face value of Rs.2) and a premium of Rs 8. The Investor bank shall not reduce its holding below 26 per cent before completion of three years from the date of the infusion of the capital.
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However, focusing on the constitution of the board of directors, the draft says: “From the Appointed date, the office of the Administrator of Yes Bank, appointed by the Reserve Bank shall stand vacated, and a new Board, shall stand constituted. The investor bank shall have two nominee directors appointed on the Board of the Reconstructed Bank. Reserve Bank of India may appoint Additional Directors in the exercise of the powers conferred by sub-section (1) of Section 36AB of the Banking Regulation Act, 1949. It will be open to the board of directors of Yes Bank to co-opt more directors. However, the total membership in the Board, excluding the Additional Directors appointed by the Reserve Bank of India under Section 36AB of the Act, shall not exceed the maximum prescribed by the Articles of Association.”
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Taking cognisance of the wide network of employees and branches, the draft says, “The offices and branches of the reconstructed bank shall continue to function in the same manner and at the same places, as they were functioning prior to the effective date, without in any way being affected by this Scheme.” Also, it says that the reconstructed bank can open or close down existing offices or branches, in accordance with the extant policy of the Reserve Bank and complying with the necessary terms and conditions.
