Yes Bank ~ Has the RBI & MOF lost it !? SEBI really is a bystander here
Controversial Lock In Clause 3 Sub Clause 8 (a) in the Scheme of Reconstruction
No wonder the Finance Minister Mrs Nirmala Sitharaman, while highlighting only selected points, even when asked for details of the Scheme,did not want to say it at Friday,March 13,2020 evening press meet to announce cabinet decisions,one of which was the approval of RBI’s Scheme of Reconstruction for Yes Bank and that a notification would follow. A gazetted notification did follow late same evening by the Department of Financial Services,Ministry of Finance and it’s available on Yes Bank’s website here and on egazette website here
While I commend the Government on it’s promise to protect all depositors monies what caught my eye in it was this absolutely ridiculous clause 3, sub clause 8(a) that essentially puts 75% of the shares held by existing investors in quarantine or lock in for three years too along with 75% of the new shares to be allotted to State Bank of India and other Investors at Rs 10 which too will enjoy a capital tax gains exemption.Only small shareholders holding less than 100 shares will be exempted from this restriction.Here’s it verbatim :
(8) There shall be a lock-in period of three years from the commencement of this Scheme to
the extent of seventy-five per cent in respect of-
(a) shares held by existing shareholders on the date of such commencement;
(b) shares allotted to the investors under this Scheme:
Provided that the said lock-in period shall not apply to any shareholder holding less
than one hundred shares.
Is this a joke !? but then it’s not April 1 yet !
Is the Government protecting the minority shareholders or actually safeguarding the incoming Bank and other High Networth Investors who have committed to participate at just Rs 10 per share with capital gains tax exemption too in this Yes Bank Scheme of Reconstruction,2020 ?
Yes Bank too has notified the exchanges yesterday of the Scheme of Reconstruction highlighting the above lock in
Yes Bank covered extensively in my Equity Workshops past two years
For the past two Years most of the fundamental ‘Value vs Price’ equity workshops that I conducted showcased Yes Bank Case Study in detail and why though quite a few participants thought it looked great in 2019 at Rs 115 and then later even at Rs 80, why one should not be foolishly courageous as the true stress in Advances was clearly not visible and Networth could be wiped out on true provisioning .