Reserve Bank of India is not in favour of foreign bidders acquiring 51% in Yes Bank; Japan’s Sumitomo Mitsui Banking Corporation has shown interest in acquiring a controlling 51% stake.
Yes Bank’s stake sale has hit a regulatory wall as the Reserve Bank of India (RBI) is not in favour of foreign bidders acquiring a majority 51% in the listed private bank.
Japanese lender Sumitomo Mitsui Banking Corporation (SMBC) has shown interest in taking a controlling 51% stake in Yes Bank. Last month, SMBC’s top leadership visited India to discuss the feasibility of acquiring a 51% stake in Yes Bank with RBI and State Bank of India (SBI).
Dubai-based Emirates Bank NBD is also interested to bid for a controlling stake in Yes Bank.
Yes Bank was rescued in March 2020 by a reconstruction scheme devised by the RBI under which an SBI-led consortium of lenders picked up stakes in the troubled bank. The bailout plan required state-owned SBI to pump in Rs 6,050 crore and private institutions such as HDFC Limited, ICICI Bank, Axis Bank, Kotak Mahindra Bank, Federal Bank, Bandhan Bank and IDFC First Bank to collectively infuse Rs 3,950 crore.
Yes Bank's stake sale is now likely to get delayed beyond the current financial year with the foreign bidders insisting on 51% ownership.
According to a source, the suitors are directly in talks with RBI, but the central bank is not in favour of Yes Bank ceding ownership control.
As per the current regulation, an entity can hold a maximum of 26% stake in a bank. In cases where it is higher, a fixed timeline has been set for bringing the holding down.
Negotiations between Yes Bank and potential buyers have stalled, the source said.
The RBI is yet to give a ‘fit and proper’ approval, the source added.
SBI is the largest shareholder and owns 23.33% of Yes Bank, as of 30 June 2024. HDFC Bank holds 2.75% in Yes Bank while ICICI Bank, Kotak Mahindra Bank and Axis Bank own 2.39%, 1.21% and 1.01%, respectively. Life Insurance Corporation (LIC) has a 3.98% holding.
The rescuers had a three-year lock-in period, which has expired.
Yes Bank has turned around and is now on a much better footing. The lender reported a standalone net profit of Rs 502.43 crore for the fiscal first quarter ended 30 June 2024, up 47% over the year-ago period.
