Yes Bank gets Rs 60,000 crore life support; RBI assures liquidity, with a condition

Yes Bank gets Rs 60,000 crore life support; RBI assures liquidity, with a condition

The Reserve Bank of India has extended a Rs 60,000 crore lifeline to India’s fourth largest private lender Yes Bank to enable the troubled bank to meet depositors’ requirements.

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The Reserve Bank of India has extended a Rs 60,000 crore lifeline to India’s fourth largest private lender Yes Bank to enable the troubled bank to meet depositors’ requirements, PTI reported citing unidentified sources. However, RBI, being the ‘lender of the last resort’, will let Yes Bank access funds only if it exhausts its own immediate liquid assets, the report added. Further, Yes Bank may have to submit a collateral in the form of stocks, funds or securities. Under the Section 17 of RBI Act 1934, the central bank can extend liquidity support to any lender against a collateral. RBI Governor Shaktikanta Das had also recently assured that the regulator will offer liquidity to the bank after lifting of moratorium in case it is required. “I would like to mention that Yes Bank has enough liquidity to meet any requirement. If there is a requirement, the RBI will provide necessary liquidity support,” he had said. Yes Bank moratorium was lifted on Wednesday at 6 PM. 

Assuring depositors, RBI Governor Shaktikanta Das had also said that in India’s history, depositors have never lost money. The RBI has assessed that the Rana Kapoor founded bank has liquidity issues but no solvency problem or any other issues, the news agency said citing sources. Early this month, the central bank RBI had imposed a moratorium on the bank in the wake of rising bad loans. As the bank also superseded the board of Yes Bank, RBI also put a cap on the withdrawal limit at Rs 50,000 per account to curb panic cash outflow. However, the same was dissolved yesterday and normal banking services have resumed since then. While RBI had put in place the deadline of 3 April to resolve the Yes Bank crisis, the actual reconstruction took place at least two weeks ahead of the deadline. Eight companies have so far come out to save Yes Bank from its crisis including State Bank of India (SBI), which now has over 48% stake in the bank.

Source- Financial Express.

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