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.
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.