NEW DELHI:
The government on Thursday placed troubled private lender Yes Bank under a moratorium till April 3, superseding its board of directors and limiting withdrawals to 50,000 rupees ($680) during the period.
In a statement, India’s central bank said the move was necessary to quickly restore depositors’ confidence in the lender after its inability to address potential loan losses and resultant downgrades.
“The bank has also experienced serious governance issues and practices in the recent years which have led to steady decline of the bank,” the Reserve Bank of India said in a statement.
The RBI has also superseded the Board of Directors of Yes Bank for a period of 30 days owing to serious deterioration in the financial position of the Bank.
Prashant Kumar, ex-DMD and CFO of State Bank of India has been appointed as the administrator of the bank.
Earlier, Bloomberg News had reported that the government has approved a plan for State Bank of India(SBI) to lead a consortium including Life Insurance Corporation(LIC)that will buy a stake to rescue the capital-starved Yes Bank.
As per reports, SBI would soon start the process to identify other members of the consortium before a bid is made to take over the ailing bank.
The financial position of Yes Bank Ltd. (the bank) has undergone a steady decline largely due to inability of the bank to raise capital to address potential loan losses and resultant downgrades, triggering invocation of bond covenants by investors, and withdrawal of deposits. The bank has also experienced serious governance issues and practices in the recent years which have led to steady decline of the bank, said RBI.