RBI Likely to Offer Rs 8,000-10,000 Crore Special Liquidity Window for Cash-Starved Yes Bank: Report

New Delhi: The Reserve Bank of India (RBI) is likely to offer a special liquidity window for crisis-hit Yes Bank to calm panicked depositors, Moneycontrol reported on Saturday citing three government sources.

"Considering the peculiar circumstances surrounding this case, the RBI is likely to extend a short-term loan or line of credit to Yes Bank of around Rs 8,000-Rs 10,000 crore to reduce panic among depositors and ensure sufficient funds for permitted withdrawals," the report quoted one source as saying. "As it is a special case, the interest component will be lesser and final touches are being given to this plan."

It also quoted two of the sources as saying that offering liquidity to a distressed entity is rare but permissible under Section 17 of the RBI Act. “This not to be confused with negotiations on picking up an equity stake in Yes Bank which are happening simultaneously,” a source said.

The RBI had on Thursday placed Yes Bank, India’s fifth-largest private sector lender, under a moratorium, and took over from its board for 30 days. It also imposed limits on withdrawals to protect depositors, leading to long queues outside its branches and ATMs.

The central bank said the move was necessary because of a serious deterioration in the lender's financial position and that it would swiftly work on a revival plan.

Under a rescue plan laid out by the government, the State Bank of India (SBI) will take a 49% stake in the troubled lender.

The SBI said it will be issued 245-crore shares at a price of Rs 10 each for Rs 2,450 crore in Yes Bank. These shares will translate into a 49 per cent stake into the reconstructed bank.

SBI shall not reduce its holding below 26 per cent before completion of three years from the date of infusion of the capital, the country's largest lender said in a statement.

It further said that the new board of Yes Bank will have CEO and MD, non-executive chairman and non-executive directors.

"All the employees of the reconstructed bank shall continue in its service with the same remuneration and on the same terms and conditions... at least for a period of one year," SBI said.