The Reserve Bank of India (RBI) on Thursday put Yes Bank under a one-month moratorium, limiting withdrawals from at Rs 50,000 for the next 30 days, a government notification said. The notification clarified that a person with multiple accounts will be able to withdraw Rs 50,000 combined. Not only this, the central bank has also directed Yes Bank to limit its expenses at Rs 50,000 on each item. Further, RBI has also superseded board of Yes Bank with immediate effect. Yes Bank has been grappling with mounting bad loans. Earlier today, SBI and LIC were reportedly given the government approval to bail out capital-starved Yes Bank.
In further directions, the Reserve Bank of India has restricted Yes Bank from granting or renewing any loan or advance, effective from today. The bank cannot even make any investment, incur any liability or agree to disburse any payment. However, Yes Bank will be allowed to spend money on making disbursements to depositors and creditors within the Rs 50,000 limit imposed by the RBI. It will also be allowed to continue paying employees’ salaries, bills, rent, rates and taxes, etc.
The Reserve Bank of India has also announced that it may, on a case to case basis, approve higher amounts of expenditure if the circumstance arises. Yes Bank will also have to take special permission if it has to make any emergency expenditure till the time RBI’s directions are in force.
Meanwhile, the RBI has assured the depositors of the bank that their interests will be fully protected and there is no need to panic. RBI also said that it will explore and draw up a scheme in the next few days for the bank’s reconstruction or amalgamation. RBI said that it will present the new scheme, with the approval of the government, well before the thirty-day moratorium ends, so that the depositors are not put to hardship for a long period of time.