PhonePe feels Yes Bank heat as RBI limits withdrawals

By: |
March 6, 2020 1:53 PM

The fall-out of Yes Bank being placed under a moratorium by the Reserve Bank of India was felt by one of India’s biggest digital payments platform PhonePe and online brokerage firm Zerodha.

PhonePe, which depends on the cash-starved lender for its transactions, witnessed a service outage after the Reserve Bank of India limited Yes Bank customer withdrawal to just Rs 50,000 for the next 30 days.

The fall-out of Yes Bank being placed under a moratorium by the Reserve Bank of India was felt by one of India’s biggest digital payments platform PhonePe and online brokerage firm Zerodha. PhonePe, which depends on the cash-starved lender for its transactions, witnessed a service outage after the Reserve Bank of India, in a bid to save the troubled private sector lender limited customer withdrawal to just Rs 50,000 for the next 30 days. Net banking facilities too were out on Yes Bank’s website since last evening.

Explaining why the payment services on PhonePe were not working, CEO and co-founder, Sameer Nigam tweeted, “We sincerely regret the long outage. Our partner bank (Yes Bank) was placed under moratorium by RBI. Entire team’s been working all night to get services back up asap (as soon as possible).” Nigam further re-assured users that PhonePe would be back soon. Other fintech operators who rely on Yes Bank to settle their transactions are also down, according to a PTI report. Walmart-owned PhonePe dominated the UPI transactions growth rate in 2019, clocking in a 857.22 per cent growth in UPI transactions, followed by Paytm.

Customers of Yes Bank may face inconvenience in the coming weeks with withdrawal restrictions in place. Brokerage firm Zerodha canceled requests made to Yes Bank accounts by customers, saying that move is to protect its clients. “We have canceled all fund withdrawal requests made by clients to their Yes bank accounts so that the money doesn’t get blocked. Please change, if your primary bank account is Yes, to any other and withdraw the funds,” a tweet by Nithin Kamath, co-founder Zerodha said.

On Thursday, India’ largest Public Sector Bank, SBI said that its Board has given an in-principle approval for the bank to explore the investment opportunities in Yes Bank. According to ET Now, SBI along with LIC may pick up a 49 per cent stake in Yes Bank through preferential shares at Rs 2 per share for an amount of Rs 490 crore. According to the moratorium placed on Yes Bank by the RBI, the former will not be able to grant or renew any loan or advance, make any investment, incur any liability or agree to disburse any payment. Yes Bank shares tanked by as much as 80% on Friday to trade below Rs 10 a piece.

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