Yes Bank's ARC plan falls flat with RBI citing conflict of interest
Yes Bank had sought approval to launch an assets reconstruction company and was expecting to transfer nearly ₹500 billion
Yes Bank's ARC plan falls flat with RBI citing conflict of interest Yes Bank had sought approval to launch an assets reconstruction company and was expecting to transfer nearly ₹500 billion of bad loans to it The Reserve Bank of India (RBI) has reportedly rejected Yes Bank Ltd's application that could have helped it to manage its bad loans due to the purported conflict of...
Yes Bank's ARC plan falls flat with RBI citing conflict of interest
Yes Bank had sought approval to launch an assets reconstruction company and was expecting to transfer nearly ₹500 billion of bad loans to it
The Reserve Bank of India (RBI) has reportedly rejected Yes Bank Ltd's application that could have helped it to manage its bad loans due to the purported conflict of interest.
The beleaguered bank wanted to set up an asset reconstruction company (ARC) to warehouse its staggering bad loans which are estimated to be to the tune of 15.36 per cent of its total assets.
Yes Bank had sought RBI's approval to launch the ARC in September 2020 and was expecting to operationalize it beginning the current month.
RBI is understood to have reasoned that since most of the Yes Bank's stressed loans have already been declared as fraud cases, it could not have been permitted to transfer the same to an ARC.
According to reports, Yes Bank was expecting to transfer nearly ₹500 billion worth of bad loans to the ARC. Yes Bank's initial plans were to put in an initial capital of ₹10 billion with the foreign investors putting in approximately ₹25 billion in the now junked ARC.
The RBI had given Yes Bank three months to implement retail recasts and six months for corporate loans so that it could initiate a debt recast for loans worth ₹8,062 crore. This, however, has not been implemented yet.