Government caps deposit withdrawal limit of Yes Bank to Rs 50,000
New Delhi : The Central Government has imposed a moratorium on the Yes Bank, effective from March 5, restricting withdrawal of deposit fund to Rs 50,000. Any kind of withdrawal above the mentioned amount will be granted only after the permission from the Reserve Bank of India.
The new moratorium has come into effect from 6pm on March 5, 2020 and will remain till April 3, 2020.
According to the notification, the bank will not pay any depositor a sum exceeding Rs.50,000/- lying in any savings, current or any other deposit account.
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.
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.
In the situation of finding no resolution in maintaining the liquidity of the bank funds, the central government came up with the said solution.