Immediately after news of the government capping withdrawals of Yes Bank customers at Rs 50,000 became public, the bank's customers have been frantically trying to take out their money.
Paridhi Sharma (name changed) visited ten different Yes Bank branches in Mumbai since 10 am on March 6 to try her luck at withdrawing Rs 5 lakh.
Sharma, who is set to get married in June, has around Rs 16 lakh in her Yes Bank account. She has to pay advance for the catering and hall expenses but she was not able to withdraw more than Rs 20,000 due to the serpentine queues across branches.
"I did hear that we were allowed to withdraw Rs 5 lakh (while the cap is Rs 50,000, the government allows higher withdrawals for wedding and education purposes) but the situation on the ground is very different. I am hoping that there is some relief on the withdrawal restrictions after April 3," she bemoaned.
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When news broke on March 5 night about the withdrawal restriction, people immediately started queuing up outside ATMs. However, since the back-end technology was being updated to implement the withdrawal cap, frustrated account holders were unable to get cash.
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"I thought I was quick to reach the ATM. But I kept getting an error saying transaction cancelled," said a college student R Abhishek who has Rs 30,000 in the bank. While he knows that the money is safe, the last date to submit the next semester fees is nearing.
Abhishek stays close to the Bandra Kurla Complex and has been visiting the bank branch as well as ATMs frequently.
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While the finance ministry has said that it will allow exceptions to let people withdraw up to Rs 5 lakh for educational expenses, foreign education and wedding expenses, detailed guidelines on this matter are yet to be issued.
RBI took a decision to place Yes Bank under a moratorium after the bank was unable to raise funds to meet its capital needs.
For customers, the situation was nothing short of panic. Bank employees at a few branches were seen calming down customers who broke down thinking that their savings have been taken away.
At a Yes Bank branch in Andheri, a bank employee made a senior citizen sit down and have tea while trying to patiently explain that the situation was not as bleak as it sounded. This 70-year old lady has about Rs 5.7 lakh worth fixed deposit at the bank that she saved for buying jewellery for her grand-daughter.
"They (branch officials) tried to tell me about some deposit insurance where I will be guaranteed at least Rs 5 lakh. But will that insurance grant me the cash now. I am sure there is no instant payments. My medical bills were also being paid out of this," said the lady.
Here, a few customers who had maintained accounts since a decade demanded to know why they weren’t informed earlier. Employees had one answer: Even we had no clue.
For Yes Bank, which boasts of over 1,000 branches across India, there were many first-timers visiting them.
Puja Yadav, a banker at a rival firm opened an account several years ago on the promise of a higher interest rate. Yadav, who uses the bank mobile application, walked into a Kurla branch for the first time.
"At least the ATMs should have been functional. I had to skip work to do this," she said. Yadav has a few investments linked to Yes Bank and is working with other financial services firms to change the ECS mandate.
The biggest worry seems to be for those who linked their home-loan EMIs to Yes Bank. A default in EMI payment means that the credit score of an individual is adversely affected. With withdrawal restrictions in place, there is lack of clarity on what happens if the account is not debited on time.
However, 35-year old wealth management professional Raja Mani is breathing a sigh of relief as he had changed the ECS mandate to another bank a month ago. Call it a stroke of luck, his request was accepted on the morning of March 5.
Other banks who have suddenly received multiple requests for change in EMI debit account from Yes Bank are still only receiving applications. The final processing will take between 30-40 days which means that there is a likelihood of several individuals missing to pay their home loan instalments in March and April.
The RBI directive comes at the first week of March. The first ten days of the month is when salaried professionals get their salaries and hence the home loan EMI also gets debited during this period.
While both the finance ministry and RBI have tried to assuage the concerns of account-holders, a lot of questions still remain.
Will Sharma be able to show that her wedding is an 'exceptional situation'? Is a deterioration of credit score a credible enough reason for an individual to seek a higher withdrawal limit? And how many people will be given this relaxation?
Till these questions are answered, the queues outside Yes Bank branches and ATMs are only going to get longer.
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