The Union Finance Ministry on Friday notified the reconstruction scheme for crisis-hit YES Bank and said that moratorium on the bank will be lifted within three working days and a new board, having at least two directors of SBI, will take over within seven days of the issuance of notification.

Government issued Gazette notification following approval by the Union Cabinet of RBI’s “YES Bank Limited Reconstruction Scheme, 2020”.

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Government issue Gazette notification following approval by Union Cabinet “Yes Bank Limited Reconstruction Scheme, 2020” yesterday.@nsitharamanoffc @RBI @DFS_India @PIB_India pic.twitter.com/wlGiD1FGX1

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— Ministry of Finance (@FinMinIndia) March 14, 2020

Last week, the RBI placed YES Bank under moratorium and capped the withdrawal limit at Rs 50,000 till April 3, due to deteriorating financial health of the bank. The central bank also superseded YES Bank’s board of directors and appointed former SBI CFO Prashant Kumar as its administrator.

Speaking to reporters in Delhi on Friday, Finance Minister Nirmala Sitharaman said that within three days after the notification of the reconstruction scheme, the moratorium on YES Bank will be lifted.

“In the next seven days after the reconstruction scheme’s notification, a new board will be constituted at YES Bank and at least two directors of State Bank of India will be part of the new board,” said the finance minister.

Sitharaman said that State Bank of India (SBI) will invest 49 percent of equity in YES Bank, with other investors also being invited.

According to Finance Minister Nirmala Sitharaman, the Cabinet decided that the SBI will hold at least 26 per cent of the 49 percent of its stake in the private bank for a minimum period of three years. Similarly, the other investors, including the private banks will also be mandated to have a similar lock-in period for 75 per cent of their investment in the bank.

As the Union Cabinet on Friday approved the RBI’s reconstruction scheme for YES Bank, major private banks have come out with investment commitments into the crisis-hit bank.

Four top Indian private banks, HDFC, ICICI, Kotak Mahindra and Axis Bank have announced investments which cumulatively account to Rs 3,100 crore. ICICI Bank was the first private lender to have confirmed its participation in the SBI-led restructuring plan for YES Bank.

Both ICICI and HDFC Bank would invest Rs 1,000 crore each. Axis Bank and the Uday Kotak-led Kotak Mahindra Bank would put in Rs 600 crore and Rs 500 crore, respectively.

Both ICICI and HDFC Bank are likely to have five per cent shareholding each in the restructured YES Bank. In its regulatory filing, HDFC Bank informed that its investment of Rs 1,000 crore would be completed by March 31.

The banks will acquire equity shares of Rs 2 each of YES Bank Limited, at a premium of Rs 8 per equity share, which means they would buy shares at Rs 10 each under the proposed Scheme of Reconstruction of YES Bank Limited under the Banking Regulation Act, 1949.

The authorised share capital of the YES Bank will be revised upwards from Rs 1,100 crore to Rs 6,200 crore. Speaking to the media after the Cabinet meeting, Sitharaman also said that other investors are also being invited to invest in the cash-strapped bank.

Sources said that Radhakishan Damani, Rakesh Jhunjhunwala, Azim Premji Trust may also pick up some equity in the private lender. However, this could not be independently verified. As per experts, YES Bank would require over Rs 20,000 crore to avoid a collapse. So far the committed investment amount stands at over Rs 10,000 crore, which is just half of the initial assessment.