Govt imposes a withdrawal limit of Rs. 50,000 for depositors of Yes Bank
Government has imposed a withdrawal limit of 50,000 rupees for depositors of beleaguered private lender Yes Bank for one month. An official notification issued by the finance ministry said that the cap will stay in effect till 3rd of next month.
The limit on withdrawal comes with a few exemptions in cases like medical emergency, higher education, marriage and unavoidable emergency.
The Reserve Bank of India (RBI) superseded the board of Yes Bank and imposed a month-long moratorium, it said in an announcement late on Thursday. It expects to arrive at a credible restructuring plan in the next few days.
Depositors will be restricted to a maximum withdrawal of Rs 50,000 even if they have multiple accounts, a government gazette notification said. RBI will relax the withdrawal limit in the event of medical emergencies, higher education fees or marriage expenses — up to a cap of Rs 5 lakh. Drafts and pay orders issued so far will be paid in full, it said.
“The Reserve Bank assures the depositors of the bank that their interests will be fully protected and there is no need to panic,” it said in a statement. This is the first time that the central bank has taken such drastic action with respect to a big bank since July 2004 when the regulator got state-run Oriental Bank of Commerce (OBC) to take over Global Trust Bank to rescue the private sector lender.
The RBI action follows the lender’s inability to raise funds that would have helped it provide against loan losses. Prashant Kumar, former deputy managing director at State Bank of India (SBI), will be the administrator of Yes Bank, RBI said.