InvestorQ : Is it true that a foreign investor is investing money in Yes Bank and what does that mean for the future of the bank?
Anamika Sodhani made post

Is it true that a foreign investor is investing money in Yes Bank and what does that mean for the future of the bank?

Answer
user profile image
11 months ago


In the last few days, Yes Bank has been claiming that they have expressions of interest from large global funds (including family offices) to take a stake in Yes Bank and infuse close to $1.6 billion into Yes Bank. However, there have been no firm offers nor has Yes Bank mentioned any specific names at this point of time.

There were some newspaper reports about DBS of Singapore taking a stake in Yes Bank but that is something that DBS Bank of Singapore has denied and now even Yes Bank has denied the news. In these kinds of circumstances we can only believe a piece of news after the formal announcement is made.

However, there are some major question marks that need to be answered. Firstly, the full extent of the NPAs in the books of Yes Bank are not yet know and it is uncertain if any global fund or bank will come forward to buy the stake without the overall clarity. Secondly, foreign funds cannot hold more than 10% of an Indian bank as per RBI regulations. For an infusion of $1.6 billion, even if you consider a price of Rs.100/share for the deal, you are looking at selling a 30% stake in the bank. That would require special RBI permission and is a long drawn process.

At this stage it may not be too wise to speculate on the future of Yes Bank. Rather wait for the actual deal to happen and then you can take a call on the same.