Seven private lenders together with SBI will obtain tax-free income of ₹13,483 crore from their Yes Bank stake sale to Sumitomo Mitsui Banking Corp (SMBC) of Japan. The September quarter will see the completion of the secondary market deal which enables SMBC to buy 20% of Yes Bank shares thus becoming India’s largest foreign bank acquisition and Japan’s biggest bank entry into the Indian market.
The Yes Bank Reconstruction Scheme of 2020 granted banks that invested during the crisis period complete exemption from capital gains tax when they sold their shares. The tax exemption served to motivate financial institutions to take part in the restructuring process. The lenders would have needed to pay 12.5% long-term capital gains tax if they did not have this exemption.
SBI plans to sell 13.19% of its 24% Yes Bank stake for ₹8,888,900 crore while seven private banks including HDFC Bank and ICICI Bank and Axis Bank and Kotak Mahindra Bank will sell 6.81% of their shares for ₹4,594 crore. The initial purchase price of ₹10 per share has increased to ₹21.50 during the time of resale.
SMBC plans to invest ₹16,000 crore into Yes Bank through equity and debt which will enhance the bank’s financial position and transform its ownership structure.
