India's cabinet has approved a rescue plan for Yes Bank, the finance minister said on Friday, as authorities look to prevent a broader banking crisis.
The government-owned State Bank of India, the country's largest lender, will take a 49 per cent stake in Yes Bank, Finance Minister Nirmala Sitharaman said.
Mumbai-headquartered ICICI Bank also said it would invest up to 10 billion rupees (Dh495.45 million) for a 5 per cent stake in Yes Bank, which is India's fifth-largest private lender.
Axis Bank will also invest up to 6bn rupees, it said in a regulatory filing.
"The decision to provide a reconstruction scheme keeps at its core the protection of depositors' interest, keeps at its core providing stability to Yes Bank and also keeps at its core a stable financial environment and banking system," Ms Sitharaman told reporters in New Delhi on Friday.
This month, India placed Yes Bank under a moratorium because of a serious deterioration in its financial position.
The moratorium, a move to reassure depositors by handing control to the central bank, would be lifted within three days once a government notification is issued, the minister said.
She did not give a precise timeline.
Private investors that join the rescue deal will need to maintain at least 75 per cent of their investments for a minimum of three years, she said.
SBI, which had said it would invest 72.50bn rupees, will not be allowed to reduce its stake to below 26 per cent for at least three years, Ms Sitharaman added.
The Reserve Bank of India last week increased Yes Bank's authorised share capital, paving the way for a cash injection.
The authorised share capital of Yes bank had now been hiked to 62bn rupees from 11bn rupees, Ms Sitharaman said.
