Yes Bank Customers Panic As Withdrawal Limited To Rs 50,000; Banking Operations Suspended, RBI Takes Over Yes Bank
The Reserve Bank of India has taken over the board of Yes Bank, which was once awarded “India’s Fastest Growing Bank of the Year”.
Imposing a moratorium of 30 days on the bank, the apex bank has also announced that there will be a cap of withdrawal of deposits up to Rs. 50000. While announcing this, the RBI has also told the public not to panic.
Why has RBI bank superseded the board of Yes Bank? Are there any exceptions to the withdrawal limit? Read on for all the details!
RBI Takes Over Yes Bank; Withdrawal Limit Set To Rs. 50k
The Reserve Bank of India took over the board of Yes Bank for 30 days and for this, they have cited the reason for “serious deterioration in the financial position of the Bank.”
Also, the bank has taken this step to ensure that the depositors in the bank don’t lose their confidence. They have also designed schemes for reconstruction or amalgamation.
RBI Says Don’t Panic
RBI said, “The Reserve Bank assures the depositors of the bank that their interests will be fully protected and there is no need to panic.”
The limit of withdrawals has also been capped to Rs. 50000, no matter how many accounts you have in the bank. However, there are a few exceptions to this, such as medical emergencies, higher education fees or marriage expenses. Also, drafts and pay orders will be paid in full.
Taxpayers To Be Biggest Casualty?
Over the past few months, Yes Bank has been striving to raise its capital to cross the $2 billion number and is struggling to stay above regulatory requirements. To save the bank from the sticky situation that it is in, the government is planning to bail out the bank.
However, this will result in a moral hazard for taxpayers in India, as revealed by a report.
Analysts at Macquerie said, “The fact that government is considering such a bail out proposal clearly shows the risk inherent in investing in PSU banks/companies who continue to be subjected to the vagaries and compulsions of the government. The bigger casualty is taxpayers as their money is being used to infuse capital in PSU banks time and again. In other words, it is the taxpayers who are bailing out YES Bank indirectly in our view.”
We will keep you updated, as more details come in.