Govt hopes SBI will exit YES before three-year lock-in period

New Delhi: The government is hoping that State Bank of India (SBI) will exit Yes Bank well before the three-year lock-in period proposed in the draft reconstruction plan for the troubled lender.The exit may be as early within a year, a senior government official told TOI, adding that in such a situation SBI may need a special permission from the Reserve Bank of India (RBI), which has worked out the restructuring strategy in consultation with the finance ministry.“There is massive interest from investors and SBI will get some very good names. We expect things to normalise in the coming months and once that happens, SBI can slowly reduce its holding and exit,” said an official. The draft restructuring plan has proposed that SBI has to hold at least 26 per cent stake in Yes Bank for at least three years.Bankers, however, said it may be too early to talk about an exit plan as the extent of the problem at the lender, which has been under regulatory spotlight for the past few months, will only be known once the new management takes charge and start implementing the revamp strategy.Besides, the economic uncertainty could create fresh bumps for the banking sector, especially for an entity which is under pressure, bank executives said.Official sources said the strategy to get SBI to acquire up to 49 per cent in Yes Bank was a well thought-out strategy as it did not put any pressure on the exchequer or the bank, with initial infusion of around Rs 2,500 crore. Besides, it does not put any pressure on SBI’s balance sheet.RBI and the government appeared keen to try out a new model for restructuring instead of saddling the public sector with problematic entities and weighing down its operations for the next few years.Bankers, however, suggested that a part of the reason may have had to do with SBI’s own reluctance to merge Yes Bank with itself, given the massive mismatch in the operating structure and salaries of the two lenders, apart from concerns over the private player impacting the country’s largest bank’s balance sheet.

from Economic Times https://ift.tt/38F6P1j