Yes Bank crisis deepens, RBI limits withdrawals

Mumbai, March 5

Troubled private sector lender Yes Bank was placed under a “moratorium” late Thursday evening, with the RBI capping depositor withdrawals at Rs 50,000 per account for a month and superseding the Board with immediate effect.

The Reserve Bank of India (RBI) took the decision in consultation with the government to protect depositors’ interest. The RBI also superseded the Board of Yes Bank, which has not been able to raise required capital for the past six months. It also appointed former chief financial officer of SBI Prashant Kumar as the administrator of Yes Bank.

“The RBI came to the conclusion that in the absence of a credible revival plan, and in public interest and the interest of the bank’s depositors, it had no alternative but to

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apply to the Central government for imposing a moratorium under Section 45 of the Banking Regulation Act, 1949,” the RBI said in a statement late in the evening. The statement said the bank management had indicated that it was in talks with various investors and they were likely to be successful. The bank was also engaged with a few private equity firms for exploring opportunities to infuse capital.

These investors did hold discussions with RBI officials, but for various reasons eventually did not infuse any capital. The bank was facing regular outflow of liquidity, the apex bank said, justifying its actions. The actions came hours after sources said the government has approved a bailout plan. — PTI