RBI to come up with a reconstruction plan for YES Bank soon: Sources

The Reserve Bank of India (RBI) was likely to frame a reconstruction plan for troubled private lender YES Bank and send it to the interested lenders shortly, official sources said on Friday.

"The central bank will send the plan to the lenders or interested investors. The plan will then be sent to the central government for approval," one of the two people aware of the matter said.

The RBI will send the reconstruction plan to YES Bank and lenders who are interested. They will be given an opportunity to raise objections and give suggestions within a time period. The plan will finally be sent to the central government for approval. Unlike amalgamation, reconstruction will involve lenders hand-holding YES Bank for a brief period of time, according to an official.

A senior government official said the scheme would be forwarded to the banks in a day or two, following which it would be made public. Finance Minister Nirmala Sitharaman told reporters on Friday that she was in constant touch with the RBI and assured that depositors' money was safe.

RBI Governor Shaktikanta Das, speaking after the Associated Chambers of Commerce and Industry of India (Assocham) meeting, said the central bank would move swifty to frame a plan for YES Bank and not wait for 30 days of moratorium to get over.

"The resolution will be done very swiftly; it will be done very fast — the 30 days that we have given is the outer limit. You will see a very swift action from RBI,” Das told reporters after the summit in Mumbai.

The RBI had on Thursday superseded the board of YES Bank and imposed a 30-day moratorium on it “in the absence of a credible revival plan” amid a “serious deterioration” in its financial health. It had appointed former State Bank of India chief financial officer Prashant Kumar as its administrator.

The State Bank of India (SBI) has shown interest in investing in YES Bank. Its board met on Friday and gave an in-principle approval.

“This will surely not be a rescue plan. You will get to know when the scheme is out,” a top SBI executive who did not wish to be named said, hinting that the state-owned bank might not take over YES Bank.

This is the first time that a bank of this size will be put under a moratorium by the RBI. During the moratorium, which came into effect from 6 pm on Thursday, YES Bank will not be allowed to grant or renew any loans, and “incur any liability”, except for payment towards employees’ salaries, rent, taxes and legal expenses, among others.

The central bank said the decision was taken in the public interest and in the interests of the bank’s depositors, and that it was left with “no alternative”.

This is not a sectoral problem. It is a bank-specific problem," SBI Chairman Rajnish Kumar, who has been meeting the finance ministry brass in New Delhi on Friday, said. "The RBI will take all steps to ensure financial stability."