Yes Bank Crisis: RBI Restrictions On Withdrawals Leaves Thousands Of Depositors In The Lurch
The magnitude of the impending crisis in the Indian banking sector is slowly unraveling after yet another bank ran into trouble with the Reserve Bank of India.The RBI on Thursday evening superseded the board of directors of Yes Bank and limited cash withdrawal to Rs 50,000 until April 3, 2020.?
RBI has appointed deputy managing director and CFO of State Bank of India, Prashant Kumar, as an administrator of the bank.According to reports, the RBI action came after attempts for an SBI-led bailout plan failed.
Under the restrictions, Yes 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.As the news spread, panicked customers ran to the bank branches and ATMs to withdraw their life's savings.?
Unlike in the case of Punjab and Maharashtra Co-operative Bank and Sri Guru Raghavendra Sahakara Bank which are facing similar RBI restrictions, Yes Bank is a private scheduled bank and a lot of people, especially in the private sector have their salary accounts with Yes Bank.Many have loans with other banks and EMIs and bills to pay.?
"It was shocking that the RBI put a limit of Rs 50,000. I have tried to take out cash from ATMs but they were blocked by Yes Bank. NEFT transactions were also not taking place. I came here at 7 am to withdraw money," Yogesh Sharma, a Yes Bank customer at Fort Branch in Mumbai told ANI.?
"I will think about continuing my account with Yes Bank. I had an account with Yes Bank for two years," he said.Another customer said: "It was shocking. I think RBI took the decision to make Yes Bank strong and structured. I believe RBI will protect depositors' money."?
Besides, customers said certain UPI transactions which are on the Yes Bank PSP are reportedly not going through, all types of accounts are inaccessible even via netbanking, and many fintech players are hit badly.?
Against the backdrop of the Yes Bank crisis, the Maharashtra government has decided to only bank with public sector banks, officials said.Instructions to the effect have been issued by Chief Minister Uddhav Thackeray to the concerned departments.?
The Rana Kapoor and Ashok Kapur-led bank had been going through troubles for some time now and had failed to get its act together despite being given several opportunities.
"The financial position of Yes Bank Ltd. 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 the recent years which have led to steady decline of the bank," the release noted.
