Yes Bank Moratorium: AMCs give investors option to channelise payout money to other banks

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Published: March 6, 2020 3:38 PM

Some AMCs even decide to hold the payout money on redeptions due on Friday, March 6, 2020 to allow the investors opportunity to change the bank.

Yes Bank Moratorium, mutual fund, MF, payout account, redemption money, Asset Management Companies, AMCs, RBI, CAMS, dividend payoutAMCs won’t accept investment money through Yes Bank instruments.

After the Yes Bank failed to raise capital to address potential loan losses, the Reserve Bank of India (RBI) has put a 30-day moratorium on the Rana Kapoor-promoted bank, which allows depositors to withdraw cash up to Rs 50,000 only from their accounts during the moratorium period.

In a Gazette notification in this regard, the Government of India said, “In exercise of the powers conferred by sub-section (2) of section 45 of the Banking Regulation Act, 1949 (10 of 1949), the Central Government, after considering an application made by the Reserve Bank of India under sub-section (1) of that section, hereby makes an Order of Moratorium in respect of the Yes Bank Limited, Mumbai, Maharashtra for the period from 18:00 hrs on March 5, 2020 up to and inclusive of April 3, 2020.”

To ensure that the redemption money of Mutual Fund (MF) investors doesn’t get blocked in the crisis-hit bank, Asset Management Companies (AMCs) have given the investors, having accounts in Yes Bank, option to change the payout account to some other bank(s).

Some AMCs even decide to hold the payout money on redeptions due on Friday, March 6, 2020 to allow the investors opportunity to change the bank.

“If clients want to change their Redemption bank account mandate from Yes Bank to any other bank they can send a request to mutual@kotak.com. We shall process the request for tomorrow’s redemptions so that their money isn’t blocked,” said Nilesh Shah, MD, Kotak Mahindra AMC in a Tweet on Thursday night.

Apart from payout on redemptions, AMCs have also asked the investors to change the bank for dividend payout purpose to avoid any inconvenience and ask RTAs and other intermediaries to stop accepting investment money through Yes Bank instruments.

“In view of the notification issued by the Ministry of Finance with an order of moratorium in respect of Yes Bank and capped withdrawals at Rs 50,000, we have advised CAMS to hold tomorrow’s (Friday, March 6, 2020) redemption payouts to Yes Bank account holders,” SBI MF said on Thursday.

“Please ensure not to accept any inflows through Yes Bank and also ensure not to deposit any cheques / transfer letters (of Yes Bank), which are pending at our branches,” SBI MF further said.

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