Superseding the board of an Indian private sector bank - Yes Bank - on account of a deterioration of its financial health, the country's banking regulator RBI late on Thursday evening imposed a cap on withdrawals for depositors of the bank.
“The Reserve Bank has, in consultation with Central Government, superseded the Board of Directors of Yes Bank Ltd for a period of 30 days owing to serious deterioration in the financial position of the Bank”, the Reserve Bank of India (RBI) announced through a statement.
This has been done to quickly restore depositors’ confidence in the bank, including by putting in place a scheme for reconstruction or amalgamation, the banking regulator added.
Meanwhile, the depositors of the bank will not be able to withdraw more than INR 50,000 ($704.22) between 5 March and 3 April, according to an Indian Ministry of Finance notification.
The bank, headquartered in Mumbai – India’s financial hub – had been facing trouble on the quality of its asserts, with a lot of bad loans causing stress in its balance sheet. Of late, the bank had been trying to find investors to shore up its capital base, but in vain.