NEW DELHI: India’s central bank has stepped in to save a major bank facing financial trouble.
The Reserve Bank of India (RBI) placed Yes Bank under a moratorium and capped deposit withdrawals at 50,000 rupees (about RM2,800) per account per month and superseded its board.
The bank was in talks with some private equity firms for capital infusion but could not get funds.
“The financial position of Yes Bank Ltd has undergone a steady decline largely due to its inability to raise capital to address potential loan losses and resultant downgrades, triggering invocation of bond covenants by investors, and withdrawal of deposits,” the RBI said in a statement on Thursday (March 5).
The RBI assured the bank’s depositors that their interest “will be fully protected and there is no need to panic.”
Mumbai-based Yes Bank is the fourth largest private sector lender in India and operates a network of 1,000 branches, according to information on its website.
The RBI said Yes Bank has “experienced serious governance issues and practices” in recent years.
This is the second major banking fiasco in India in seven months.
In September, the central bank put restrictions on deposit withdrawals at the Punjab and Maharashtra Co-operative Bank (PMC) following a loan scandal. – March 6, 2020, Bernama
