New Delhi (NVI): A day after RBI imposed a moratorium on Yes Bank and capped withdrawal limit to Rs 50,000 per month, the bank’s share price tumbled 85 per cent today, with Finance Minister Nirmala Sitharaman saying that the Reserve Bank of India is working towards an early resolution on the issue.
The Union Finance Minister, While addressing a press conference today, said that Yes Bank depositors money is safe. RBI has also urged the depositors not to panic.
“The Reserve Bank assures the depositors of the bank that their interests will be fully protected and there is no need to panic,” it said in a statement.
Yesterday, the Central Bank had superseded the board of directors of the troubled Yes Bank for a period of 30 days “owing to serious deterioration in the financial position” of the bank.
The withdrawal restriction (capped at Rs 50,000/month), which came into effect from 6 pm yesterday, will remain in place April 3.
A government notification has also said that Yes Bank cannot make in 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 till April 3rd.
The RBI action follows the lender’s inability to raise funds that would have helped it provide against loan losses.
Depositors will be restricted to a maximum withdrawal of Rs 50,000 even if they have multiple accounts, as per the government notification.
RBI will relax the withdrawal limit in the event of medical emergencies, higher education fees or marriage expenses — up to a cap of Rs 5 lakh. Drafts and pay orders issued so far will be paid in full, it said.
The decision on Yes Bank was taken at a “larger level” and not at the individual entity level, and was aimed at ensuring the safety of the financial system, RBI governor Shaktikanta Das said. He also assured, “RBI stands ready to intervene in whatever way required to respond to epidemic challenges”.
“In the absence of a credible revival plan, and in public interest and the interest of the bank’s depositors, (the RBI) had no alternative but to apply to the central government for imposing a moratorium,” the central bank said.
However, the troubled bank will be allowed to repay loans or advances granted against government securities or other securities to the bank by the RBI or by any other bank and remaining unpaid as of Thursday. It would also be allowed to operate its account with the RBI.
