In the present scenario, The State Bank of India and the Reserve Bank of India have likely

conducted thorough due diligence on the Bank. They have already undertaken negotiations
between SBI, RBI, and other investors to buy into the new rights issue that the SBI holds.
SBI can go down to 26 per cent shareholding, but not below because it has to give the bank
stability. Because SBI has the clout, it can also go after borrowers who still owe the bank
money and recover it.
• The best course would have been for a private investor or investors to have acquired
the Bank, infused capital and revived it, but this will happen only when Yes Bank
gains trust.
Alternatives
1. Government to take over the Bank.
2. SBI, LIC and, perhaps, some other banks would form a consortium to rescue Yes
Bank.
3. Merge Yes Bank with SBI or any other bank. (Global Trust Bank merged with OBC)
4. By many estimates, Yes Bank requires at least Rs 25,000 crore of capital. Thu, SBI
would have severely stretched.

Under the draft plan proposed by RBI

It appears that a merger is not being favoured at this point. RBI plans to alter the authorised
capital for the reconstituted Bank to Rs 5,000 crore from Rs 800 crore. The plan proposes that
any investor, including SBI, can pick up a 49% stake in the equity of Rs 5,000 crore at Rs 10
per share. This would amount to around Rs 2,450 crore.

The draft plan is intended to bring in a reliable promoter. It is expected to stem the outflow of
deposits that is certain to take place once the present 30 -day cap on withdrawal of deposits
over Rs 50,000 is lifted. Next, SBI would have to look for a private investor to whom shares
would be issued at a suitable premium. Through this, the necessary infusion of capital can
take place.

• All employees of the reconstructed Yes Bank will continue with the same pay for at
least one year.
• The investment bank will not reduce its holding in the new Bank below 26% before
completion of 3 years.
RBI says that State Bank of India (SBI) has expressed its willingness to make an investment
in Yes Bank and participate in its reconstruction scheme.