The Reserve Bank of India placed Yes Bank under a moratorium and restricted withdrawal from the capital-starved bank at Rs 50,000 in the next one month. This restriction came into effect from 6 pm on March 5 and will remain in place till April 3, 2020.
The RBI also superseded the bank’s board and appointed an administrator for the period.
“This has been done to quickly restore depositors’ confidence in the bank, including by putting in place a scheme of reconstruction or amalgamation,” RBI said.
Since a bank and market-led revival is a preferred option over a regulatory restructuring, the Reserve Bank made all efforts to facilitate such a process and gave the adequate opportunity to the bank’s management to draw up a credible revival plan, which did not materialise. In the meantime, the bank was facing regular outflow of liquidity,” RBI noted.
Yes Bank cannot make an 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, said a government notification. The RBI however said it may allow payment of over Rs 50,000 to Yes Bank depositors an amount in excess of Rs. 50,000 like expenses for medical treatment, marriage and education.
During this restriction period, the bank can neither grant fresh loans nor renew old loans and is prevented from making investments, or disbursing payments in lieu of its liabilities and obligations.
The decision affected the stocks as shares of Yes Bank on Friday plunged by almost 25 per cent on the Bombay Stock Exchange at Rs 27.65.
On the National Stock Exchange, Yes Bank shares dropped by 20 per cent to Rs 29.45.
The entire banking unit plummeted in opening trade, with RBL Bank trading 15 per cent lower, followed by IndusInd Bank which dropped by 11 per cent, SBI by 7 per cent and Axis Bank by 4 per cent on the BSE.
Yes Bank depositors also multitude of problems today, as they hurried to withdraw cash from ATMs, including closed down machines and long queues.