Yes Bank Crisis: Problems equity, MF investors may face and steps to overcome them

By: |
March 11, 2020 4:18 PM

The investors using Yes Bank accounts for investing through SIP, SEP, monthly auto debit for periodic investments may face the risks of discontinuance of their investment journey.

Yes Bank Crisis, Yes Bank moratorium, Reserve Bank of India, RBI, Asset Management Companies, AMCs, insurance companies, financial institutions, mutual fund, MF, Capital Market, Bonds, SIP, SEP, auto debit, NACHDepending on investment instruments and modes of investments, people investing in MF, Capital Market, Bonds etc may face different problems.

The restrictions on withdrawals due to the moratorium imposed by the Reserve Bank of India (RBI) on Yes Bank may cause problems for investors having accounts in the crisis-hit bank. Several Asset Management Companies (AMCs), insurance companies and other financial institutions and intermediaries have already issued directive on not to accept Yes Bank cheques and other instruments for further investments.

To ensure that their money doesn’t get stuck up in Yes Bank accounts due to the moratorium, AMCs have given opportunity to mutual fund (MF) investors to change their accounts to get the redemption money credited to other banks.

However, the investors using Yes Bank accounts for investing through systematic investment plan (SIP), systematic equity plan (SEP), monthly auto debit for periodic investments may face the risks of discontinuance of their investment journey.

According to India’s top MF distribution company NJ India Invest Pvt. Ltd., depending on investment instruments and modes of investments, people investing in MF, Capital Market (direct equity), Bonds etc may face different problems.

For example, purchase (NACH mode) / fund transfer transactions through Yes Bank to invest in MF, Capital Market and Bonds will get rejected by the banker.

Similarly, SIP transactions for investments in MFs and Capital Markets will get rejected by the banker and clients will not be allowed to register SIP on YES Bank Mandates.

In order to avoid existing registered SIP installment getting bounced, investors should immediately change the bank to ensure that the existing SIPs don’t get stopped.

As cheques issued from Yes Bank will not be accepted for MF purchase (Offline TIS) and/or margin update in Capital Market, investors need to provide cheques of other banks.

In order to ensure that redemption payout, refund and withdrawals from MF schemes and Capital Markets don’t get stuck up in their accounts, cheques would be issued for customers having accounts in Yes Bank, instead of direct credit.

While AMCs and financial intermediaries are trying to cooperate with investors to avoid the crisis, if you have a Yes Bank account registered as pay in and pay out account, you need to act swiftly to change it to ensure that your investment journey doesn’t get abruptly stopped.

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