‘BANK CURB MAY END IN 1 WEEK’
MUMBAI: The moratorium on private lender YES Bank could end as early as Saturday, but State Bank of India (SBI) will have to put in capital for these curbs to be lifted, Prashant Kumar, the administrator appointed by the Reserve Bank of India (RBI), said on Monday.
“We are working out a fast resolution mechanism and the moratorium might be lifted as early as Saturday. SBI needs to put in the money first and then the moratorium would end,” said Kumar, former deputy managing director and chief financial officer of SBI.
The move will come as a relief to depositors facing restrictions on withdrawals. Following the moratorium, multiple banking channels of Yes Bank, including automatic teller machines, internet banking and unified payments interface, had crashed on Friday.
MUMBAI: The moratorium on private lender Yes Bank could end as early as Saturday, but State Bank of India (SBI) will have to put in capital for these curbs to be lifted, Prashant Kumar, the administrator appointed by the Reserve Bank of India (RBI), said over the phone on Monday.
“We are working out a fast resolution mechanism and the moratorium might be lifted as early as Saturday. SBI needs to put in the money first and then the moratorium would end,” said Kumar, former deputy managing director and chief financial officer of SBI.
The move will come as a relief to depositors facing restrictions on withdrawals. Following the moratorium, multiple banking channels of Yes Bank, including automatic teller machines, internet banking and unified payments interface, had crashed on Friday.
SBI chairman Rajnish Kumar on Saturday said the survival of Yes Bank was critical for the financial system and the stateowned lender will invest ₹2,450 crore immediately, which can later go up to over ₹10,000 crore depending on due diligence and final valuation, to pick up a 49% stake in Yes Bank.
YES SOLD ₹15,000 CR OF LOANS SINCE SEP TO REPAY DEPOSITORS
Since last September, Yes Bank had sold more than ₹15,000 crore of loans to public sector banks to meet mounting demand for withdrawal of deposits, said two people aware of the development, requesting anonymity.
According to the people cited above, deposits worth over ₹20,000 crore were withdrawn from the bank during the sixmonth period. The official deposit figure is not yet available since the lender is slated to declare its December quarter results on March 14. “Public sector banks purchased these loans through the interbank participation certificate route from Yes Bank to provide immediate liquidity,” said the first person, adding that the bank was aggressively pitching these certificates to other lenders as it needed urgent cash to repay depositors.
These were retail loans originated by Yes Bank and were classified as standard on its books, he added.
The RBI’s Working Group on the Money Market in 1987 headed by former ICICI Bank chairman N Vaghul had recommended the introduction of interbank participations, to provide an additional instrument to even out shortterm liquidity mismatches within the banking system. These certificates allow transfer of loans for short term between commercial banks and are typically valid for 90-180 days.
The first person said since the December quarter or even earlier, customers were not sure of the safety of their deposits and, therefore, several large depositors withdrew their money. He said the negative perception was aggravated by the collapse of the Punjab and Maharashtra Co-operative Bank Ltd and DHFL last year. As on 30 September, Yes Bank’s total deposits stood at ₹2.09 lakh crore, of which ₹64,496 crore were in current and savings accounts, and the rest in term deposits.
Emailed queries to Yes Bank and RBI remained unanswered till press time.