Yes Bank is planning a follow on public offer to raise additional funds to shore up its capital base. Meanwhile, SBI proposes to invest Rs.1760 crore in the Yes Bank follow-on public offer or FPO. Yes Bank had to plan this FPO to shore up its Tier-1 capital and create the arsenal to start lending aggressively in the market.

SBI is already the largest shareholder in Yes Bank after the RBI superseded the Yes Bank management and replaced with a new board under Mr. Prashant Kumar of SBI. The SBI decision to infuse fresh funds, therefore, will come as a certificate of confidence to Yes Bank. SBI had approved the infusion of Rs.7250 crore into Yes Bank.

It may be recollected that Yes Bank was taken over by SBI in consortium with a clutch of large banks after the Yes Bank liquidity position almost became untenable and unsustainable. Yes Bank had then been put under moratorium for a period of over 2 months after which regular transactions were permitted. This FPO is the key to Yes Bank’s future.