Yes Bank branches and ATMs across the country opened on Friday bearing circulars issued by the Ministry of Finance which stated that depositors can withdraw only up to Rs 50,000 from their accounts. The moratorium was issued by the Reserve Bank of India (RBI) on Thursday, as it superceded the troubled private lender's board.
Yes Bank Ltd. placed under Moratoriumhttps://t.co/GcAFiDs6CU— ReserveBankOfIndia (@RBI) March 5, 2020
The circular issued read, "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conferred under 36ACA of the Banking Regulation Act 1949, the Reserve Bank has in consultation with Central Government, superseded the Board of Directors of Yes Bank Ltd for a period of 30 days owing to a serious deterioration in the financial position of the Bank.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."
The bank will not be able to grant or renew any loan or advance, make any investment, incur any liability or agree to disburse any payment. The apex bank has assured customers that their interest will be fully protected and they do not need to panic.
Supersession of the Board of Directors-Appointment of Administrator-Yes Bank Ltdhttps://t.co/mkanLEGzuy— ReserveBankOfIndia (@RBI) March 5, 2020
The decision comes hours after it was reported that the Finance Ministry had approved State Bank of India to explore investment opportunities in the private bank. Yes Bank has been struggling to raise funds, with bad loans increasing.
The RBI has taken over the Board of Yes Bank on March 5.
The government, in the circular also gave an exemption to Yes Bank regarding payments. "During the period of the moratorium, Yes Bank can make the following payments: the amount to repay loans or advances granted agaisnt government securities to the banking company by the Reserve Bank of India or State Bank of India, or any other Bank on any unpaid date on which the order comes into force."
Yes Bank stocks fell by more than 70% on Thursday morning, since rebounding to an extent.