The Reserve Bank of India (RBI) on Thursday said a “moratorium” has been imposed on Yes Bank till April 03, 2020, stressing that the bank’s financial capability has undergone a decline largely due to the inability of the bank to raise capital.
Here are the things you must know about the moratorium imposed;
Why a sudden impose of RBI on Yes Bank for the withdrawal limit?
Yes Bank’s capital base was just above the Tier 1 level is the core measure of a bank’s financial strength from a regulator’s point of view and hence it needed to raise funds urgently to be able to carry on with its working. This caused stress for Yes Bank.
I had purchased a demand draft (DD) on Yes Bank on March 03, 2020, and sent it to a vendor? Will that DD be still valid?
RBI has clarified that all Demand Drafts and Pay orders issued before 8 PM on March 05, 2020, will be honored. However, no fresh drafts or pay orders can be now issued by Yes Bank.
What if I have issued cheques on Yes Bank that are yet to be cleared or if I have an ECS for SIP of a mutual fund with Yes Bank?
After March 05, Yes Bank will not be permitted to honor any cheques or ECS mandates. Hence, your cheques will not be cleared and you need to call up the payee and intimate them accordingly. In the case of ECS mandates, you will have to change the bank mandate for the ECS to be able to continue the same.
What if there is an emergency expense like my daughter’s marriage or a health emergency and my money is locked in Yes Bank? What can I do in such a situation?
The RBI has made a special provision in the order. In such emergencies like medical needs, marriage expenses and education expenses, the limit can be increased to Rs5 lakhs per individual subject to the claim being backed by the right documentation and adequate evidence.
I have three bank accounts with Yes Bank and my wife has 2 accounts with Yes Bank. Can I withdraw an overall amount of Rs50,000 from each of these accounts?
No, that will not be possible. RBI clarified that the limit of Rs50,000 applies to an individual identified by a unique PAN. So you can withdraw Rs50,000 and your wife can withdraw Rs50,000 till April 03, 2020.
What happens to investors who have invested in FDs of Yes Bank over the last few years?
Bank deposits will come under the overall restriction of Rs50,000 and this will include FDs also. However, all these deposits will be covered under deposit insurance.
I have Rs1 lakh in my Yes Bank account and I have an Rs80,000 personal loans outstanding. Can I withdraw Rs50,000 from the bank as stated by RBI?
The RBI will only allow net withdrawals from your deposit account after adjusting for outstanding loans and also for the guarantees given by you. In the above case, you will only be allowed to withdraw up to Rs20,000.
What about the existing CEO and the Board of Directors of Yes Bank? Will they still be involved in running the bank?
No, they will not be involved any longer. The RBI has superseded the board of Yes Bank and that means the existing board stands terminated.
What happens to the employees of Yes Bank and their salaries?
RBI has allowed the bank to pay routine expenses like rents and salaries subject to RBI approval.