JOIN USRBI takes over control of Yes Bank; caps withdrawal to Rs 50,000
The Reserve Bank of India on Thursday placed YES Bank under moratorium and restricted withdrawals to Rs 50,000, as the central bank assumed control of the troubled private sector lender.
According to a gazette notification by the Ministry of Finance, no person can withdraw an amount in excess of Rs 50,000 crore from the bank from March 5 to April 3 irrespective of the number of accounts he/she holds.
In a late evening notification, RBI said that entire board of the YES Bank has been superseded and Prashant Kumar, ex-DMD and CFO of State Bank of India has been appointed as the administrator under Section 36ACA (2) of the Act.
The Department of Financial Services under the Ministry of Finance issued the direction in exercise of the powers conferred by sub-section (2) of section 45 of the Banking Regulation Act, 1949 (10 of 1949).
"The Central Government hereby also directs that during the period of moratorium, the Yes Bank Limited, Mumbai, Maharashtra (the said banking company) shall not, without the permission in writing of the Reserve Bank of India make, in the aggregate, payment to a depositor of a sum exceeding Rs. 50,000 lying to his credit, in any savings, current or any other deposit account, by whatever name called," the notification by the government said.
The government has also directed the bank not to pay any creditor in excess of Rs 50,000.
It may be noted that YES Bank has not been able to raise funds to buffer up depleting capital. To add to the woes, the bank has been witnessing a high level of withdrawals from the depositors in recent days, thereby causing a drop in its CASA ratio. Current Account-Saving Account (CASA) is the cheapest form of funds available to the banks.
This move comes amid the news of public sector lender State Bank of India (SBI) bailing out the bank.
RBI Governor Shaktikanta Das, however, declined to comment on the takeover of Yes Bank by SBI. To a pointed question in a media interview, Das, merely said that the RBI remained committed to ensuring that the country's financial system and banks remained strong and stable.
YES Bank's majority stake is controlled by retail investors after its co-founder Rana Kapoor exited the bank.
The lender had delayed its December quarter earnings amid an alleged depletion of CASA ratio, the stress in corporate loan book and bulging contingent liabilities. While the contingent liabilities are double of bank's balance sheet size, according to September filing, the total exposure to shadow lenders and developers -- who are caught in a cash crunch -- stood at 11.5%.