Moneycontrol
Get App
you are here: HomeNewsBusiness
Last Updated : Mar 06, 2020 11:52 AM IST | Source: Moneycontrol.com

Yes Bank: Govt caps deposit withdrawal at Rs 50,000

The bank will not be allowed to pay depositors a sum exceeding Rs.50,000 in any savings, current or any other deposit account, the government said in a notification.


The Central Government has imposed a moratorium on Yes Bank effective today, restricting the withdrawal of deposits to Rs 50,000. Any withdrawal over the amount will require the permission of the Reserve Bank of India.

The moratorium will be applicable from 6:00 pm on March 5 to April 3, 2020.

The bank will not be allowed to pay depositors a sum exceeding Rs.50,000/- lying in any savings, current or any other deposit account, the government said in a notification.

Close

Also Read: RBI supersedes Yes Bank board with immediate effect

The restrictions in the withdrawal of deposits will be subject to certain conditions. RBI may, by a general or special order, permit the  bank to allow withdrawal of over Rs 50,000 in the following unforeseen circumstances:

- in connection with the medical treatment of the depositor or any person actually dependent on him;

- towards the cost of higher education of the depositor or any person actually dependent on him for education in India or outside India;

- to pay obligatory expenses in connection with marriage or other ceremonies of the depositor or his children or of any other person actually dependent upon him;

- in connection with any other unavoidable emergency.

Also Read: JP Morgan cuts Yes Bank target to Re 1 after stake sale report

In a press release, the RBI said, the financial position of Yes Bank has undergone a steady decline largely due to inability of the bank to raise capital to address potential loan losses and resultant downgrades, triggering invocation of bond covenants by investors, and withdrawal of deposits. The bank has also experienced serious governance issues and practices in recent years, which have led to a steady decline of the bank.

RBI said it has been constantly engaging with the bank’s management to find ways to strengthen its balance sheet and liquidity and the management had indicated that various investors had been approached and were likely to come on board.

Also Read: Govt may nudge LIC to play white knight to rescue Yes Bank

However, in the absence of a credible revival, the central bank said, it has come to the conclusion that, in the interest of the bank’s depositors, it had no alternative but to apply to the Central Government for imposing a moratorium under section 45 of the Banking Regulation Act, 1949.

Accordingly, the Central Government has imposed moratorium effective from today, restricting the withdrawal of deposits to Rs 50,000, RBI said in the release.

Moneycontrol Ready Reckoner
Now that payment deadlines have been relaxed due to COVID-19, the Moneycontrol Ready Reckoner will help keep your date with insurance premiums, tax-saving investments and EMIs, among others.
Get best insights into Options Trading. Join the webinar by Mr. Vishal B Malkan on May 28 only on Moneycontrol. Register Now!

First Published on Mar 5, 2020 08:52 pm
Sections
Follow us on