SBI falls 5%, Yes Bank gains 29% on deal buzz

Shares of SBI fell as much as 5.3 percent while those of Yes Bank rose more than 17 percent intraday after reports made rounds that the former may buy a stake in the beleaguered bank.

According to Bloomberg, SBI has been asked by the government to form a consortium for stake purchase of the Yes Bank.

Commenting on the development, former IBA CEO VG Kannan told CNBC-TV18 that the stake purchase by SBI should not be seen as an acquisition but rather an investment.

Banking regulators won't allow substantial stake acquisition in another bank, he added.

The exchanges had sought a clarification from SBI and Yes Bank in the matter and the following is the response from the banks:

Yes Bank: "In the said matter, we would like to clarify that as on date, the Bank has not received any such communication from RBI or any other the Government or Regulatory authorities or from the SBI and we are unaware of any such decision."

SBI: "We will abide by the timelines under Regulation 30 of SEBI (LODR) Regulations 2015 in disclosing the developments, if any in the matter to Stock Exchanges.

At 15:00 hrs, SBI was quoting 290.25, up 1.74 percent, while Yes Bank was quoting 35.95, up 22.70 percent.