(Image source from: jantakareporter.com)

The Reserve Bank of India (RBI) has said that it has superseded the board of Yes Bank and has imposed a month- long moratorium, as said in an announcement late on Thursday. It expects to arrive in the next few days, at a restructuring plan that is credible.

It has been said in a statement that the depositors of the bank have been assured by the Reserve Bank that their interests would be completely protected. This is said to be the first time that a drastic action with respect to a big bank has been taken by the central bank since the month of July in the year 2004 when the regulator has got the state- run Oriental Bank of Commerce (OBC) in order to take over the Global Trust Bank in order to rescue the private sector lender.

The action taken by the Reserve Bank of India is said to follow the inability of the lender to raise funds that would have helped it providing against the loan losses. The Reserve Bank of India has said that, Prashant Kumar who is the former deputy managing director at the State Bank of India would be the administrator of Yes Bank.

According to a government gazette notification, it has been said that the depositors would be restricted to a maximum withdrawal of Rs 50,000 even if the depositors have multiple accounts.

It has also been said that the withdrawal limit would be relaxed by the Reserve Bank of India in case of medical emergencies, higher education fees or for the expenses of marriage which would be up to a cap of Rs 5 lakh and that the drafts and the pay orders which have issued so far would also be paid in full.

The repaying of loans by the Yes Bank will be allowed and the advances that have been granted against the government securities or the other securities by the Reserve Bank of India to the bank or by any other bank and it has been remained unpaid would also be allowed.

During the last month, the exchanges have been informed by the Yes Bank that about half- a- dozen investors which include JC Flowers& Co., Tilden Park Capital Management, OHA (UK), part of Oak Hill Advisors and also the Silver Point Capital had submitted the expressions of interest that are nonbinding.

The announcement of the quarter results of the month of December have also been postponed by the Yes Bank citing the fund raising talks to the 14th of March.

By Shrithika Kushangi