The Reserve Bank of India (RBI) on Thursday superseded the board of Yes Bank and imposed a month-long moratorium, it said in an announcement. The central bank is expected to arrive on a credible restructuring plan in the next few days and has put a withdrawal limit at Rs 50000.
“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 for the first time that the Reserve Bank of India has taken such a drastic step with respect to a big lender since July 2004 when the regulator got public lender Oriental Bank of Commerce (OBC) to take over Global Trust Bank to rescue the private sector lender.
The RBI action comes in response to 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.
“In the absence of a credible revival plan, and in public interest and the interest of the bank’s depositors, (the RBI) had no an alternative but to apply to the central government for imposing a moratorium,” the central bank said.
“The Reserve Bank will explore and draw up a scheme in the next few days for the bank’s reconstruction or amalgamation and with the approval of the central government, put the same in place well before the period of moratorium of 30 days ends so that the depositors are not put to hardship for a long period of time.”