In a worrying development for YES Bank customers, the Reserve Bank of India (RBI) capped withdrawals by depositors at Rs 50,000. The central bank has also superseded the board of YES Bank and appointed Prashant Kumar, former Deputy Managing Director and CFO of State Bank of India, as administrator.
In a statement on Thursday, the RBI said that it is satisfied that "in order to protect the interest of the depositors and in public interest, it is necessary to issue certain directions to Yes Bank".
"YES Bank... shall not grant or renew any loan or advance, make any investment, incur any liability or agree to disburse any payment, whether in discharge of its liabilities and obligations, or otherwise enter into any compromise or agreement, or shall transfer or otherwise dispose of any of its properties or assets," the central bank stated
The central bank has assured the depositors of YES bank that their interest will be fully protected and there is no need to panic. "The Reserve Bank will explore and draw up a scheme in the next few days for the bank's reconstruction or amalgamation and with the approval of the Central Government, put the same in place well before the period of moratorium of thirty days ends so that the depositors are not put to hardship for a long period of time," the RBI said.
The private sector lender has been grappling with mounting bad loans. Earlier in the day, reports had said that SBI along with some other financial institutions would bail out the capital-starved YES Bank, with the government giving the go-ahead. Experts had cautioned against the move.
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