MUMBAI: Reserve Bank Governor Shaktikanta Das on Monday assured that crippled Yes Bank has enough funds to meet any requirements and promised that the central bank will step in with additional liquidity support if needed.
The assurance comes at a time when there is a worry that once the moratorium is lifted on March 18 evening, there can be a run on the bank, putting more liquidity pressure.
"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" Das told reporters and also announced that after 6 pm on March 18, depositors can take their money out without any restrictions.
The bank's deposit base eroded by Rs 72,000 crore to Rs 1.37 lakh crore as of March 5, 2020 as against Rs 2.09 lakh crore as of December 31, 2019, according to data shared by the bank last Friday while announcing the Q3 earnings.
Under the reconstruction scheme, which the governor said is progressing as planned, the private lender has received over Rs 10,000 crore from eight financial institutions, including Rs 6,050 crore from SBI.
ICICI Bank and HDFC (Rs 1,000 crore each) Axis Bank (Rs 600 crore), Kotak Mahindra Bank (Rs 500 crore), Bandhan Bank, Federal Bank (Rs 300 crore each) and IDFC First (Rs 250 crore) also joined the SBI-led consortium and invested in Yes Bank.
The government notified the Yes Bank reconstruction scheme late last Friday. With that, the moratorium on the bank will be lifted by March 18. The RBI on March 5 put clamped a moratorium on Yes Bank, capping withdrawals to Rs 50,000 per depositor till April 3.
This was done according to deputy governor NS Vishwanathan, was required under section 45 of the Banking Regulation Act that requires a moratorium as a pre-condition for drawing up a revamp scheme. "The RBI could not have drawn up a scheme, under Section 45, prior to a moratorium being imposed," he explained.
The governor also assured depositors that their money in the private bank is safe and there is no need for them to go for panic withdrawals. "I would like to convey to all the depositors of Yes Bank that their money and deposits are completely safe and there is no reason for any undue worry or rushing into withdrawing their deposits," he said.
He said that there has been no instance in the nation's banking history where banks depositors have lost their money.
Speaking on the decision of a few states shifting their deposits from private banks to state-run banks, Das said "the health of the banking sector, including private banks, is safe and therefore, there is no reason for the state authorities to take away deposits from private banks".
Terming Yes Bank's restructuring scheme as credible and sustainable, Das said it is the first instance of public-private partnership for a revival of a private sector bank. "On earlier occasions, whenever there was a failure of a scheduled commercial bank, the usual method was amalgamation with a larger entity. This time, we have not done so and the identity of Yes bank will be retained as a private bank," he said.