After placing moratorium and limiting withdrawals at â¹50,000 on Thursday, the Reserve Bank of India on Friday evening said that the State Bank of India (SBI) would invest up to â¹2450 crore in the cash-strapped Yes Bank. The investment will give 49 per cent of Yes Bank’s shareholding to SBI.
‘The SBI Board has given ‘in-principal’ approval to pick up 49 per cent stakes in Yes Bank,’ said SBI Chairperson Rajnish Kumar while addressing a press conference in Mumbai, India Today reported.
‘Our effort is to ensure the resolution plan is approved and implemented before the time set by RBI. It is a matter of few days and depositors should not worry about the safety of their money,’ Rajnish Kumar said. He, however, said the final decision on the amount SBI will invest in Yes bank will be taken by the SBI Board.
Earlier on Friday, Finance Minister Nirmala Sitharaman had claimed that is working towards for early resolution of Yes Bank issue and assured that as per the RBI governor there will be no loss to any Yes Bank depositor.
Sitharaman claimed that this drastic step had been taken in the interest of depositors, bank and the economy. ‘I want to assure every depositor’s money is safe, and I’m in constant touch with RBI,’ Finance Minister Nirmala Sitharaman said.
She added that while both RBI and government are looking at Yes Bank issue in detail and action will be taken in everyone’s interest; the priority right now is to ensure Yes Bank customers are able to withdraw money within â¹50,000.
The Yes Bank Issue
Harried Yes Bank depositors in Mumbai hurried to ATMs to withdraw cash but faced a number of issues like closed down machines, long queues and transaction denials, after the Reserve Bank of India placed the bank under a moratorium and capped maximum withdrawals at â¹50,000 per account for as long as a month.
The RBI’s action came after the Finance Ministry notified the stoppage of all actions against the banking company from 6 pm on Thursday to 3 April. However, the RBI said the Yes Bank account holders that there is no need to panic and it will protect their money. RBI in a statement, soon after the finance ministry order, said that they ‘assure depositors of the bank that their interest will be fully protected and there is no need to panic’.
Exceptions will be made only in a few cases by a ‘competent authority’, in which the amounts cannot be more than â¹5 lakh or the amount of money that is in the accounts (whichever is less).
No loan or advance will be granted or renewed by Yes Bank. It also cannot make any investment, incur any liability or agree to disburse any payment.
The Bank will be able to pay salaries and housing rents to its over 20,000 employees.
In case one is paying their EMI from their Yes Bank account, they will need to immediately contact their receiving Bank or housing company and ask for a one-month window. If they have a salary account with Yes Bank, they will need to figure out other funds.
Yes Bank will be led by the RBI-appointed administrator Prashant Kumar, an ex-chief financial officer of SBI, for the next month.
The central bank said that the drastic move was taken because of a serious deterioration in Yes Bank’s financial position. It assured that a revival plan would be swiftly worked.
Across Mumbai, security at Yes Bank headquarters, its branches and ATMs has been tightened to avoid untoward incidents as hundreds of accounts holders queued up to withdraw money.
