RBI gears up for run on Yes Bank after end of moratorium

Shiv Kumar
Tribune News Service
Mumbai, March 11

The Reserve Bank of India is gearing up for a major run on Yes Bank’s deposits after it lifts the moratorium on the troubled lender in the next few days.

According to sources at the central bank, deposit holders, including individuals, corporate houses, trusts and other entities, could begin liquidating their holdings as soon as they are allowed to do so.

The RBI had imposed a moratorium last week under which cash withdrawal by every account holder was restricted to just Rs 50,000.

According to publicly available information on Yes Bank, it had deposits in current and savings accounts to the tune of Rs 2,26,600 crores as on March 31, 2019.

The exact amount of deposits at present under current accounts and savings accounts is not available as Yes Bank has not yet declared its results for the December 2019 quarter.

Several high net worth individuals, corporate houses and temple trusts are said to have withdrawn their funds from Yes Bank ever since reports about its troubles surfaced several months ago.

“Before the moratorium on Yes Bank is lifted there will be investments in fresh deposits by institutional investors,” says a Reserve Bank of India official.

Apart from nationalised banks, RBI also wants several major private banks to also park their excess funds with Yes Bank.

It is still not clear how much deposits will be pulled out once RBI lifts the moratorium on Yes Bank.

In the past when banks like Centurion Bank, Global Trust Bank, Times Bank and other institutions showed signs of stress, they were quickly merged with stronger banks

thus preventing a run on their wholesale and retail deposits.

In the case of Yes Bank, it is not being merged with State Bank of India though it would be the single largest share-holder, according to brokerage houses here.

According to analysts, Yes Bank had managed to attract deposits from individuals, trusts, and small and medium businessmen by offering attractive rates of interest even on savings bank accounts.

The troubled lender’s user-friendly website allowed customers to quickly open accounts with it and transfer funds electronically.

Already, the RBI has got the State Bank of India to invest up to Rs 10,000 crores in fresh capital for a 49 per cent stake in Yes Bank.

It is also working on bringing other investors on board to subscribe to fresh equity in the distressed bank.