Frantic Yes Bank depositors lined up outside ATMs across the country hours after the private bank was placed under a moratorium by the RBI.
The RBI on Thursday capped deposit withdrawals at Rs 50,000 per account for a month for customers.
Harried Yes Bank depositors rushed to ATMs to withdraw cash but faced a multitude of problems including closed down machines and long queues after the RBI placed the bank under a moratorium.
In Mumbai, the situation escalated to such an extent that the Mumbai Police control room had to send SOS alerts to check on Yes Bank ATMs across the city to control the law and order situation.
Aggravating the problems of depositors were difficulties accessing the internet banking channel, which ensured that they can’t transfer the funds online as well.
Mumbai: RBI imposed moratorium for a month on Yes Bank due to ‘serious deterioration in its financial position’, capping withdrawals at Rs 50000. Customers say “We weren’t informed. Wanted to withdraw cash but ATM run out of cash,as many withdrew. We’re in trouble,Holi is coming” pic.twitter.com/aSWcKjA0NK
— ANI (@ANI) March 5, 2020
At an ATM in south Mumbai’s Horniman Circle, with the RBI headquarters overlooking it, the shutters were pulled down.
The guard on duty said the machine was non-operational before he reported to work late in the evening and he was ordered to shut it after 2200 hrs.
In the residential area of suburban Chembur, one ATM was dispensing cash but had a long queue of anxious depositors.
One man said it was still possible to withdraw up to Rs 50,000 in multiple transactions from the machine.
However, another machine nearby had run dry within minutes of the RBI announcement, a woman said.
Jaipur too saw long queues outside ATMs. Account-holders were seen withdrawing as much money from their accounts till midnight as possible. They are worried that their hard-earned money will be lost as the private bank goes under.
Yes Bank new victim of deepening banking crisis
In another move indicating the deepening crisis in India’s banking sector, the RBI on Thursday announced that Yes Bank will not be able to grant or renew any loan or advance, make any investment, incur any liability or agree to disburse any payment.
The Reserve Bank of India assured Yes Bank depositors that their interest will be fully protected and that there is no need to panic.
The regulatory actions, undertaken by the RBI and the government, came hours after finance ministry sources confirmed that SBI was directed to bail out the troubled lender.
For the next month, Yes Bank will be led by the RBI-appointed administrator Prashant Kumar, an ex-chief financial officer of SBI.
The country’s financial sector is already reeling under a spate of setbacks, starting with the high quantum of dud assets at over Rs 10 lakh crore, their slow-paced resolutions despite legal teeth through bankruptcy laws, scandals at non-bank lenders like IL&FS and DHFL, and also fraud at cooperative lender PMC Bank.
The last lender to be placed under a similar action was PMC Bank in September last year. While the withdrawal limits have been increased over time to Rs 1 lakh now, many PMC Bank depositors are still in the lurch.
There is no provision to handle insolvencies of commercial banks, and the raft of actions come even as the government is working on the FRDI (financial resolution and deposit insurance) Bill.
Just like PMC and DHFL, the RBI superseded the board of Yes Bank for a period of 30 days “owing to a serious deterioration in the financial position of the bank”.
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