- Already falling short of capital, the withdrawal limit has been brought down at ₹50000 in the next one month.
- This decision will remain in place till 3rd
- The RBI also superseded the board of directors of YES Bank for 30 days.
It’s a bad day for the account holder of YES Bank. I’m sure before going through the news, you would want to rush to the nearest ATM and take out all the cash reserves you’ve kept with the private bank.
Withdraw limits slashed to ₹50000 is the first bummer to the bank and its account holders. The private bank cannot make in the aggregate, payment to a depositor of a sum exceeding ₹50,000 lying to his credit, in any savings or current account till the 3rd of April.
For medical treatment, marriage or education purposes, this limit may be exceeded up to ₹5lakh however. This is the first time that the central bank has taken such drastic action with respect to a big bank since July 2004 when Oriental Bank of Commerce (OBC) took over Global Trust Bank to rescue private-sector lenders.
“In the absence of a creditable 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 reserve bank will explore and draw up a scheme in the next few days for the bank’s reconstruction or amalgamation and with the approval of central government, but the same in place well before the period of moratorium of 30 days ends so that the depositors are not put to hardship for a long period of time.” – Central bank commented in a statement. (Source)
“Financial position of YES Bank Ltd. Has undergone a steady decline largely due to the 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 recent years which have led to a steady decline of the bank.” – commented by RBI.
Which is the reason why SBI & LIC have come forward to act as an investor and buy the private bank’s shares at ₹2 per shares. The private bank will not be allowed to repay loans or advances granted against government securities or any other securities to the bank by the RBI or by any other bank and remaining unpaid as of Thursday.
For the past 18 months of prosperity and growth, the private bank was looking out for new investors and was in talks with equity investors over the past year, but had failed to attract any towards them.
RBI Assures A Quick Action for YES Bank – Not to Panic!
Reserve Bank of India’s governor Shaktikanta Das assured a quick action to the issues emerging with the bank.
“Resolution to YES Bank will be done very swiftly, it will be done very fast. 30 days which we have given is the outer limit. You will see a swift action from the RBI.” – Das commented to the reporters in Mumbai.
The private bank, will not be able to grant or renew any loan or advance or make any new investments as of now. Times are tough for the private bank but as RBI’s governor assured about the quick action, we can only wait and observe for the coming 30 days what probably can be the next thing coming from the private bank.
As of now, times seems to tough for the bank. I have already come across several ATM machines are being occupied by accountholders struggling to withdraw cash reserves by the earliest.
This is another jerk for a common man who sweats and saved their money just to be able to hear on one random evening that they will not be able to take out full their earned cash as much as they wanted to.