As per news reports, RBI has imposed a moratorium on Yes Bank effective from March 5, restricting the withdrawal of deposits to Rs 50,000. Any withdrawal over the amount will require the permission of the Reserve Bank of India. The moratorium will be applicable from 6:00 pm on March 5 to April 3, 2020.
According to the official statement, the bank will not be allowed to pay depositors a sum exceeding Rs.50,000/- lying in any savings, current or any other deposit account, the government said in a notification.The restrictions in the withdrawal of deposits will be subject to certain conditions.
As per reports, RBI may, by a general or special order, permit the bank to allow withdrawal of over Rs 50,000 in the following unforeseen circumstances:
In connection with the medical treatment of the
depositor or any person actually dependent on him
Towards the cost of higher education of the
depositor or any person actually dependent on him for education in India or
outside India
To pay obligatory expenses in connection with
marriage or other ceremonies of the depositor or his children or of any other
person actually dependent upon him
In connection with any other unavoidable
emergency.
In the press release, RBI quoted, ‘the financial position of
Yes 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 recent years, which have led to a steady decline of the bank. RBI also
said it has been constantly engaging with the bank’s management to find ways to
strengthen its balance sheet and liquidity and the management had indicated
that various investors had been approached and were likely to come on board.
However, in the absence of a credible revival, the central
bank said, it has come to the conclusion that, in the interest of the bank’s
depositors, it had no alternative but to apply to the Central Government for
imposing a moratorium under section 45 of the Banking Regulation Act, 1949. Accordingly,
the Central Government has imposed moratorium effective from today, restricting
the withdrawal of deposits to Rs 50,000, RBI said in the release.