India’s Yes Bank shares surge on rescue hopes

Mumbai

Shares in India’s embattled Yes Bank soared by almost a third yesterday on hopes of a central bank-backed rescue plan for the country’s fourth-largest private lender, which tanked last week on fears it was about to collapse.

Yes Bank, which is struggling under a massive pile of bad loans, plunged 56 per cent on Friday after the Reserve Bank of India late Thursday seized control of the lender and imposed withdrawal limits. The share price rallied yesterday to close more than 31pc higher on the Bombay Stock Exchange’s Sensex index after the country’s largest lender, the State Bank of India (SBI), confirmed yesterday it was ready to invest 24.5 billion rupees ($330 million) for a 49 percent stake.

“In absolute terms, this is one of the big banking sector failures in recent corporate history for India,” Bank of Baroda economist Sameer Narang said. “So, we will have to give SBI the benefit of doubt in reviving Yes Bank.”

The Reserve Bank of India tweeted Sunday depositors should not worry about their savings in any bank after customers rushed to Yes Bank ATMs and branches on Friday and Saturday in a desperate bid to retrieve their funds. The RBI also indicate d i t wo u l d w r i t e d ow n some bonds issued by Yes Bank.

“Interest from SBI, which will likely get another investor on board, has addressed a major problem of survival for Yes Bank and buoyed its shares for the time being,” Anand Rathi securities economist Sujan Hajra said. Hajra cautioned that a full recovery was a long way away.

Yes Bank’s administrator Prashant Kumar, appointed by the RBI, told the Press Trust of India late Monday he was hopeful the withdrawal limits could be lifted as soon as Saturday if the rescue plan is approved.