Sandip Bhagaton on Yes Bank’s Decision to Delay Its Q3 Results:
Sandip Bhagaton on Yes Banks: S&R Associates Mr.Sandip Bhagat shares his opinion on Yes bank’s decision to postpone its Q3 results.
Mr.Sandip can you please tell us how the regulators may react to the Yes Bank’s decision? How do you think from the regulator’s point of view? Could there any relaxations or rules laid out with regard to the pricing at which the investors could come in?
Here, we need to consider two things, one is obviously the SEBI will come in place if more than 5% acquired by any individual investor. Where you need prior approval from Reserve Bank of India (RBI) and they look and see whether he is a proper person or not.
Whereas the second issue is really on pricing. The SEBI preferential pricing is coming by subscribing to a fresh issue of shares. However, the SEBI requirements are very clear and if they are any assumptions like if somebody is going as part of a strategic debt restructuring there we have some relaxations given in the rule itself. But, if they don’t meet those particular conditions which are there for preferential allotment. So, there is a scheme approved by a high court or there’s a conversion of the loan at which this is not one of those then you need a special relaxation from SEBI broad.
What that means is that they’ll have to go and seek an exemption from the regulator and it’s not clear to me whether or not regulator gives any exemption. I think that will have to be discussed. Why should the Securities and Exchange Board of India (SEBI) gave exemptions for them, not for the others that will be the discussions the regulators will have.
What are the proceedings to figure out? What regulator would do because there will be many considerations here are wondering? The feedback that we get when we speak to the capital market participants is the pricing may become an issue for Yes Bank?
In my opinion, the circumstances under special dispensation are given by SEBI. However, I don’t know what arguments they will make here but if the company with low income and not covered under the provisions this is kind of trouble that SEBI needs to step in.
I think these circumstances in which SEBI may look at it and think about giving relief. I don’t know if any of that exists right now for yes bank. So, I think it will be a hard case to go through but again it’s between them and the regulators.