Yes Bank depositors’ money safe; RBI working on early resolution: FM

New Delhi, March 6

As panicky depositors rushed to withdraw money from Yes Bank whose control was seized by the RBI in a dramatic late-night move, Finance Minister Nirmala Sitharaman on Friday assured depositors that their money is safe and said the central bank was working for an early resolution of the crisis.

Also read: Sensex plunges 894 points, Nifty below 11,000 as Yes Bank, coronavirus take toll

The Reserve Bank of India (RBI) on Thursday evening capped withdrawals at Rs 50,000 for the next one month and imposed strict limits on operations at the country’s fourth-largest private lender that faced “regular outflow of liquidity” after an effort to raise new capital failed.

“I am in continuous interaction with the RBI. The RBI is fully seized of the matter and has assured they will give a quick resolution,” Sitharaman said here.

She said no depositor will lose his or her money and insisted that the immediate priority is to ensure Yes Bank customers are able to withdraw money within the stipulated cap.

“I want to assure every depositor that their money shall be safe. Their monies are safe,” she said. “I am constantly in contact with the RBI and the steps that are taken are taken in the interest of depositors, banks and economy. We are fully seized of the development.”       

She was talking to reporters after meeting State Bank of India (SBI) Chairman Rajnish Kumar. On Thursday, the SBI board gave its “in-principle” approval to exploring investment opportunities in Yes Bank.

“So I repeat, the depositors can be assured that their money is safe,” she said.

Soon after the RBI takeover, depositors thronged Yes Bank ATMs to withdraw money and police had to be deployed in some places to control the crowds.

Yes Bank has 1,000 branches across the country.

Refusing to elaborate on her meeting with the SBI Chairman, the minister said that “was on a completely different matter”.

“The RBI Governor has given me assurance that there will be an appropriate resolution soon. No depositor will lose (money),” she said. “Reserve Bank has taken cognizance of the problem.”                  

The central bank, she said, has gone through the “process over and over again to find out an amicable solution”.

“And that has been over the last couple of months. So it is not as if they have come in suddenly now. We have been monitoring the situation,” she said adding the RBI has appointed an administrator who previously was with the SBI.

“Both the RBI and the government are looking at this with all the details before them, not just today. I have personally monitored the situation over the last couple of months with the RBI. Therefore we have taken a course which will be in everybody’s interest,” she added.

Yes Bank had been seeking new capital since last year to bolster its ratios and quell questions about its stability due to its exposure to the non-banking finance industry entangled in a prolonged crunch in the local credit market.

‘RBI to look into what went wrong at Yes Bank’

The Finance Minister said the bank was being monitored since 2017 and developments relating to it were being monitored on a day-to-day basis.

Since 2017, the central bank noticed governance issues and weak regulatory compliance at Yes Bank, besides wrong asset classification and risky credit decisions, she said.

On finding risky credit decisions, the RBI advised change in management, she said.

These decisions were taken in the interest of the bank’s health, and a new CEO was appointed in September 2018 and cleaning up of bank started, she said, adding that investigative agencies too had found irregularities.

She said the RBI has been asked to assess the causes of problems and identify the role played by individuals.

The Finance Minister also said that employment and salary of Yes Bank employees has been assured for one year.

She said Anil Ambani Group, Essel, ILFS, DHFL and Vodafone were among the stressed corporates Yes Bank had exposure to.

Resolution to crisis will come very shortly: SBI Chairman

The SBI Chairman said the resolution to the Yes Bank crisis will come “very shortly”.

“This is not a sectoral problem. It is a bank-specific problem,” he said. “The RBI will take all steps to ensure financial stability.”              

On SBI picking up a stake in Yes Bank, he said the lender already has an in-principle approval for doing so.

“If SBI has to pick up a stake in Yes Bank, we have an in-principle approval for that,” he said.

Commenting on the crisis at Yes Bank, Alka Anbarasu, Vice-President – Senior Credit Officer, Financial Institutions, Moody’s Investors Service, said: “RBI’s moratorium on Yes Bank is credit negative as it affects timely repayment of bank depositors and creditors.”  

“While Moody’s expects Indian authorities will take steps to prevent the weakness in the bank’s viability from significantly impacting its depositors and senior creditors, the lack of a coordinated and timely action highlights continued uncertainty around bank resolutions in India,” she said.

PhonePe services hit

Payment services provider PhonePe has suffered an outage after RBI’s moratorium.

In a tweet, PhonePe said on Friday that its services are temporarily unavailable as it is going through an unscheduled maintenance activity.

“We are temporarily unavailable. We are going through an unscheduled maintenance activity. We apologise for any inconvenience this may cause. We’ll be back soon,” it said.

“Folks, we are almost there! Our services will be up & running really soon. Thank you for your patience & support,” PhonePe said in the most recent tweet.

Sameer Nigam, founder CEO of the company, however, confirmed that the outage is a result of placement of Yes Bank under the moratorium.

“Dear @PhonePe_ customers. We sincerely regret the long outage. Our partner bank (Yes Bank) was placed under moratorium by RBI. Entire team’s been working all night to get services back up asap. We hope to be live in a few hours. Thanks for your patience. Stay tuned for updates,” Nigam tweeted.

Another payment service provider, Razorpay, said in a tweet that its team was reaching out to clients to ensure that payment gateways remain unaffected.

“Update on Yes Bank being placed under moratorium by RBI. Our payment gateway services are unaffected. While some other services may get affected; our team is reaching out to the affected businesses via email. Our team is working to ensure there is no disruption in services,” Razorpay said in a tweet. Agencies