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Govt puts Yes Bank under moratorium; withdrawals limited to Rs 50,000

This has been done to quickly restore depositors' confidence in the bank. The scheme for reconstruction and amalgamation of bank is also being put in place, RBI said in the statement.

Subrata Panda & Abhijit Lele  |  Mumbai 

Yes Bank
Yes bank management had earlier indicated to the Reserve Bank that it was in talks with various investors and they were likely to be successful.

The government on Thursday placed under moratorium till April 3, as the central bank capped depositor withdrawals at Rs 50,000 and superseded the troubled private lender's board.

The (RBI) appointed Prashant Kumar, a former deputy managing director and chief financial Officer of State Bank of India (SBI), as administrator for It said in exceptional circumstances like medical emergencies, marriages, depositors can withdraw up to Rs five lakh or amount in their accounts, whichever is less.

ALSO READ: Withdrawal limit to 'govt bailout': 10 points about Yes Bank's troubles

A RBI statement said a scheme to reconstruct or amalgamate the bank will be drawn well before the 30-day period of moratorium ends and depositors needn't "panic".

Yes Bank's has undergone a steady decline largely due to inability of the bank to raise capital to address potential loan losses and resultant downgrades.


ALSO READ: Yes Bank depositors rush to ATMs but most unable to withdraw cash

"The financial position of Ltd. (the bank) has undergone a steady decline largely due to inability of the bank to raise capital to address potential loan losses and resultant downgrades, triggering invocation of bond covenants by investors, and withdrawal of deposits. The bank has also experienced serious governance issues and practices in the recent years which have led to steady decline of the bank," said the RBI.

ALSO READ: Here's the full text of RBI's statement on Yes Bank moratorium

Yes Bank has been grappling with mounting bad loans. Media reports said earlier on Thursday SBI along with some other financial institutions would bail out Yes Bank, with the government giving the go-ahead.

The plan would throw a lifeline to Yes Bank which has been struggling to raise capital since the middle of last year, as it has faced a surge in bad loans due to the nation’s shadow banking crisis. Moody’s Investors Service cut the bank’s credit ratings in December and in January said its “standalone viability is getting increasingly challenged by its slowness in raising new capital.”

First Published: Thu, March 05 2020. 21:57 IST
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