RBI Greenlights 51% Stake Sale in Yes Bank, Paving Way for New Ownership

Reserve Bank of India (RBI) has given the green light for the sale of up to a 51 per cent stake in Yes Bank. This approval paved the way for new ownership of the private lender that narrowly avoided collapse four years ago.

As per a report by Mint, the potential stake sale could value Yes Bank, India’s sixth-largest private bank by assets, at nearly $10 billion. This would also mark the largest acquisition in India's banking sector.

At 9:50 am, the shares of the private lender were trading at Rs 25, up by around 1.13 per cent on the National Stock Exchange.

The central bank granted its in-principle approval to Yes Bank and several key shareholders a few weeks ago, as per sources cited in the report. The approval for a majority stake sale is unusual for the regulator, which typically limits promoter holding in domestic banks to 26 per cent.

“Some of the bidders are interested only if they are allowed to acquire 51 per cent in the bank. While assessing the fit and proper criteria for the potential new promoter (of Yes Bank), as a special case, RBI has agreed for a 51 per cent sale of control to an appropriate incoming promoter," a source said.

The RBI approval has now opened an exit path for SBI and other lenders which collectively own 33.74 per cent stake in the private lender.

State Bank of India (SBI) holds 23.99 per cent in Yes Bank, 2.75 per cent in HDFC Bank, 2.39 per cent in ICICI Bank, 1.21 percent in Kotak Mahindra Bank, and 1.01 percent in Axis Bank. Meanwhile, LIC owns 3.98 per cent of Yes Bank, CA Basque Investments holds 8.74 per cent, and Verventa Holdings has 9.21 per cent. The collective bank holdings in Yes Bank have decreased from 36.74 per cent in March to 35.18 per cent in April.

However, in a recent regulatory filing, Yes bank called the stake sale development "factually incorrect" and "purely speculative in nature."

"RBI has not given any in principle approval as stated in the article and this clarification is issued by the Company voluntarily to dispel the baseless media article," the regulatory filing added.

On year-to-date basis, the shares of the private lender have surged by 15.58 per cent on the NSE.