The Reserve Bank of India (RBI) has rejected Yes Bank Ltd’s application to set up an asset reconstruction company (ARC)
Yes Bank sought approval to launch the ARC in September and itwas expected to operationalize the plan within six months of securing clearance.
RBI Statment
Most of the stressed loans of Yes Bank are declared fraud cases and hence cannot be transferred to an ARC. Hence citing a conflict of interest the proposal was turned down.
In an interview with Reuters
Prashant Kumar, Managing Director and Chief Executive said : “The bank was expecting to transfer nearly ₹50,000 crore of bad loans to the ARC.
Many foreign investors had expressed interest to invest in the ARC. The bank was hoping to infuse ₹1,000 crore capital into the ARC while the foreign investors would put in ₹2,500 crore.
Bad loans till 31st December
As on December 31, Yes Bank had reported bad loans as a percentage of total assets at 15.36 percent.
The lender has also initiated a debt recast for loans worth Rs 8,062 crore as on December 31, but these have not yet been implemented.
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