• The Reserve Bank of India (RBI) has seized control of Yes Bank and has drafted a bailout plan
• The State Bank of India (SBI) is ready to invest $330 million (INR 24.5 billion) for a 49% stake on the crisis-ridden bank
• Former Yes Bank chief executive Rana Kapoor has been arrested on money laundering charges

Disaster upon disaster unfolded for the Indian private lender Yes Bank over the past week. Late Friday, 6 March, the Reserve Bank of India (RBI) moved to seize control of the bank and impose withdrawal limits. Shortly after on Sunday, 8 March, the Enforcement Directorate arrested Yes Bank founder and former chief executive Rana Kapoor for money laundering charges.

RBI’s bailout plan for Yes Bank

A moratorium was put in place to facilitate a bailout plan for the bank. Central to that plan is the country’s largest lender, the State Bank of India (SBI). SBI has said that it is willing to invest $330 million (INR 24.5 billion) in exchange for a 49% stake of the bank. Per the draft scheme, SBI is supposed to hold at least a 26% stake in Yes Bank for three years. The remaining 23% may be open to co-investors. The state-owned bank has confirmed that it is in talks with several potential investors, both domestic and foreign.

“Many potential investors have approached us after seeing the scheme… There are some very good names. What we have to keep in mind for the co-investors is a couple of things — any investor looking to invest beyond 5% will have to meet RBI’s ‘fit and proper’ criteria. If they are foreign investors, they will have to meet the FPI (foreign portfolio investor) guideline”, said SBI chairman Rajnish Kumar.

Moody’s Investor Service has labelled the moratorium a credit negative. “It affects timely repayment of bank depositors and creditors. While Moody’s expects Indian authorities will take steps to prevent the weakness in the bank’s viabili...

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