BH CORRESPONDENT, Mumbai: Crisis came calling for the Yes Bank account holders when the Reserve Bank of India imposed a withdrawal limit of Rs 50,000 till April 3. RBI has imposed a moratorium on capital-starved Yes Bank. The decision came after the private bank, which was founded in 2004 in India, failed to raise capital to address potential loan losses.
In a press statement, RBI said, 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 the recent years which have led to steady decline of the bank. The Reserve Bank has been in constant engagement with the bank’s management to find ways to strengthen its balance sheet and liquidity. The bank management had indicated to the Reserve Bank that it was in talks with various investors and they were likely to be successful,” the RBI press statement read.
Prashant Kumar, former deputy managing, director at State Bank of India, will be the administrator of Yes Bank, RBI said. Finance minister Nirmala Sitharaman has assured Yes Bank depositors that their money is safe.
Meanwhile, anxious Yes Bank depositors rushed to the ATMs across the country to withdraw country as soon as the private bank was placed under a moratorium by the RBI. The RBI, however, has assured the depositors of the Yes Bank that their interest will be fully protected and there is no need to panic.
The RBI has also said on Thursday that 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. Though there is no official confirmation, the State Bank of India board is said to have given in-principle nod for an investment opportunity in YES Bank.
Reacting to the crisis at Yes Bank, P Chidambaram wrote in a tweet, “The Bharatiya Janata Party (BJP) has been in power for six years. Their ability to govern and regulate financial institutions stands exposed.”
BJP has been in power for six years. Their ability to govern and regulate financial institutions stands exposed
First, it was PMC Bank. Now it is YES Bank. Is the government concerned at all? Can it shirk its responsibility?
Is there a third bank in the line?
— P. Chidambaram (@PChidambaram_IN) March 6, 2020
Congress leader Rahul Gandhi has also criticised the Narendra Modi government for the Yes Bank crisis.
No Yes Bank.
Modi and his ideas have destroyed India’s economy.
— Rahul Gandhi (@RahulGandhi) March 6, 2020
Shiv Sena leader Priyanka Chaturvedi wrote on Twitter that there has been no discussion about crumbling economy in the Parliament.
Yet another bank gone kaput, lakhs of investors anxious, stock market bleeding, economy crumbling.
Discussion about it in the parliament : ZERO.
Disruption & Adjournment. Rinse. Repeat.
— Priyanka Chaturvedi (@priyankac19) March 6, 2020
Meanwhile, more bad news for the businessmen as BSE Sensex tumbled 1,459.52 points to 37,011.09 in the opening session, while the National Stock Exchange Nifty tanked 362.30 points to 10,906.70.
As on June 2019, Yes Bank has nearly 1,122 branches and around 1,220 ATMs in India.