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Yes Bank Crashes 85% After RBI Takes Control, Caps Withdrawal Limit

Yes Bank plunged a day after the Reserve Bank of India (RBI) suspended the private sector lender’s board for a period of 30 days “owing to serious deterioration in the financial position of the Bank” and imposed a withdrawal limit of Rs 50,000 on its account holders with few exceptions till April 3. Shares in Yes Bank crashed 85 per cent of its value to trade at Rs 5.65. The stock closed at Rs  36.80 on Thursday.

RBI on Thursday said a “moratorium” has been imposed on Yes Bank stressing that the bank’s financial capability has undergone a steady decline largely due to the inability of the bank to raise capital.

“We will take swift action… And we have a scheme in place to revive Yes Bank,”  RBI Governor  Shaktikanta Das said. The decision on Yes Bank was taken at a “larger level” and not at individual entity level, and was aimed at ensuring the safety of financial system, RBI governor said further. The RBI governor also assured, “RBI stands ready to intervene in whatever way required to respond to epidemic challenges”.

The government has restricted the withdrawal of deposits to Rs 50,000 and any withdrawal over and above this amount will require the permission of the Reserve Bank of India.

Moody’s said the moratorium was credit negative as it affected timely repayment of depositors and creditors and added that the lack of coordinated action highlighted continued uncertainty over bank resolutions in India.