In a huge development, the Centre’s Narendra Modi government has imposed restrictions on withdrawals in Yes Bank. Customers of Yes Bank will no longer be allowed to withdraw more than Rs 50,000 at least until 3 April.
The restrictions, however, will not apply to a medical emergency, higher education, marriage and unavoidable emergency. This came after the Reserve Bank of India issued a notification stating that Yes Bank had been placed under Moratorium.
It said, “The financial position of Yes Bank Ltd. (the bank) has undergone a steady decline largely due to 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 the recent years which have led to steady decline of the bank.”
In another notification on Thursday, the RBI said that it had suspended the beleaguered bank’s Board of Directors. It said, “In exercise of the powers conferred under 36ACA of the Banking Regulation Act 1949, the Reserve Bank has, in consultation with Central Government, superseded the Board of Directors of Yes Bank Ltd. for a period of 30 days owing to serious deterioration in the financial position of the Bank. This has been done to quickly restore depositors’ confidence in the bank, including by putting in place a scheme for reconstruction or amalgamation. Shri Prashant Kumar, ex-DMD and CFO of State Bank of India has been appointed as the administrator under Section 36ACA (2) of the Act.”