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Bank Withdrawal Limit Yes: RBI imposes ‘moratorium’ on the Bank Yes; buffer withdrawals in Rs 50,000 | India Business News


MUMBAI: the lender in private sector problems Yes Bank was placed under a “moratorium” on Thursday night, with the RBI (Reserve Bank of India) limiting withdrawals from depositors to Rs 50,000 per account for one month and replacing the board with immediate effect.

The RBI made the decision in consultation with the government to protect the interest of depositors.

The central bank also replaced the Yes Bank board, which has not been able to raise the required capital during the past six months. He also appointed former SBI chief financial officer (CFO), Prashant Kumar as administrator of Yes Bank.

“The Reserve Bank concluded that in the absence of a credible revival plan, and in the public interest and in the interest of the depositors of the bank, there was no alternative but to request the central government to impose a moratorium under the section 45 of the Banking Regulation Act of 1949, “the RBI said in a statement late in the afternoon.

The statement said the bank’s administration had indicated that it was in talks with several investors and that they would probably succeed. The bank also committed to some private equity firms to explore opportunities to infuse capital.

“These investors held talks with senior officials of the Reserve Bank, but for various reasons they eventually did not infuse capital.

“Since a reactivation led by the bank and the market is a preferred option rather than a regulatory restructuring, the Reserve Bank made every effort to facilitate this process and gave the bank the appropriate opportunity to develop a plan of credible revival, which did not materialize, “the statement said.

Meanwhile, the bank faced a regular outflow of liquidity, the main bank said, justifying its actions.

The actions occur hours after sources said the government approved a plan in which the State Bank of India (SBI) and other financial institutions would rescue Yes Bank.

If the plan is implemented, it would be the first important instance in many years when a private sector lender would be rescued with public money.

In 2004, Global Trust Bank merged with Oriental Bank of Commerce and in 2006, IDBI Bank took over United Western Bank.

The brakes at Yes Bank came after a similar action was taken against the cooperative bank PMC (Punjab & Maharashtra Co-operative) Bank, in September, where depositors are still in the lurch.

“The Reserve Bank assures the depositors of the bank that their interests will be fully protected and there is no need to panic. In terms of the provisions of the Banking Regulation Law, the Reserve Bank will explore and develop a scheme in The next few days, for the reconstruction or amalgamation of the bank and with the approval of the Central Government, put the same place long before the end of the thirty-day moratorium period so that depositors do not find themselves in difficulties for a long period of time “, the central bank statement added.

Yes, the Bank has been dealing with the increase in bad loans. The bank has been trying to raise $ 2 billion in fresh capital since February 2019. It has also delayed its results for the December quarter, which was supposed to be published last month.

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