On Saturday, it was revealed that the Pimpri-Chinchwad Municipal Corporation (PCMC) has a deposit of Rs.700-800 crore in crisis-ridden Yes Bank. According to PCMC Commissioner Shravan Hardikar, an agreement had been signed with Yes Bank for online transactions and tax recovery.
Hardikar mentioned that the PCMC was seeking directions from the RBI regarding the huge deposits as the withdrawal limit has been slashed to Rs.50,000. At the same time, he asserted that there was nothing to worry about as the PCMC had deposits worth Rs.4,000 crore in other banks.
Shravan Hardikar, Commissioner of Pimpri-Chinchwad Municipal Corporation: We had signed an agreement with #YesBank for online transactions and tax recovery. Our entire income used to come through Yes bank where we must be having between Rs 700 & Rs 800 crore saving. #Maharashtra pic.twitter.com/C0nQocTjYi— ANI (@ANI) March 6, 2020
Pimpri-Chinchwad Municipal Corporation Commissioner Sharvan Hardikar: Since restriction has been imposed on withdrawal from #YesBank account, we're seeking directions from RBI regarding our money. But there is nothing to worry about as we have kept over Rs 4000-Cr in other banks. https://t.co/1Pri0UXVVF— ANI (@ANI) March 6, 2020
On Thursday, the RBI imposed a moratorium on Yes Bank, superseding its Board of Directors. In the meantime, former Chief Financial Officer of SBI Prashant Kumar has been appointed as its administrator.
The RBI has cited Yes Bank's “inability to raise capital to address potential loan losses” and “serious governance issues” as some of the reasons for taking action.
The RBI on Friday unveiled a draft reconstruction scheme of Yes Bank in the public domain. As per the scheme, State Bank of India has expressed its willingness to invest in Yes Bank and participate in the reconstruction process. Moreover, the RBI has invited suggestions and comments from the members of the public until March 9, 2020.
Under the ‘Yes Bank Ltd. Reconstruction Scheme, 2020’, the authorised capital of the reconstructed bank shall be altered to Rs.5,000 crore while the number of equity shares will be 2,400 crores. The investor bank shall hold 49% shareholding in the reconstructed bank. Moreover, it cannot reduce its holding below 26% before the completion of three years of infusion of the capital.
Once the scheme comes into operation, the RBI-appointed administrator will be replaced by a new Board on which the investor bank will have two nominee directors. Importantly, the draft states that no customer will be entitled to get any compensation from the reconstructed bank on account of the changes occurred by virtue of the scheme. On the other hand, all employees will continue in service with the same terms and services at least for a period of one year.