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Yes Bank crisis: RBI announces a bail-out scheme, invites suggestions
The draft scheme has also been sent to Yes Bank Ltd. and State Bank of India for their comments, said RBI.
The Reserve Bank of India has announced a scheme of reconstruction for the cash-strapped private sector lender Yes Bank in a notification issued on Friday evening.
The RBI notification says a draft scheme of reconstruction of the Yes Bank Ltd. has been put in the public domain for suggestions.
“The Reserve Bank invites suggestions and comments from members of public, including the banks’ shareholders, depositors and creditors on the draft scheme,” the notification said.
The draft scheme has also been sent to Yes Bank Ltd. and State Bank of India for their comments, said RBI.
“The suggestions and comments will be received by Reserve Bank of India up to Monday, March 9, 2020. The Reserve Bank will take a final view soon thereafter,” the notification added.
RBI had placed a month-long moratorium on Yes Bank limiting withdrawals of deposits to ₹50,000 for the period in the wake of the financial crisis that has hit the bank.
The Yes bank crisis peaked on Thursday with the issue of the moratorium triggering panic among the account holders who lined up outside ATM kiosks to withdraw their money. The finance minister though clarified that more money could be released for exigencies by following related RBI guidelines.
The finance minister also assured the investors that their money was safe and that a solution to salvage the bank will be found before the moratorium ends in the first week of April.
The RBI has also given similar assurances and the Friday notification for a scheme is in line with the previous announcements.
The bank is accused of handing out loans that could not be recovered and its management is suspected of insider trading, which is being investigated by the SEBI (Securities and Exchange Board of India) since September 2019.
FM Nirmala Sitharaman said the government had been monitoring Yes Bank for the last six months along with the banking regulator, RBI, which recommended removal of the top management of the bank after thorough scrutiny in 2018.
She also assured that the employees will be protected for one year
Yes Bank shares had fallen by 60 per cent after RBI interventions became public for the first time.
