12 questions you may want to ask about Yes Bank moratorium

Here are 12 points you must know about Yes Bank moratorium; as a depositor or as an investor.

March 06, 2020 9:35 IST | India Infoline News Service
Yes Bank
The RBI imposed a moratorium on Yes Bank withdrawals till April 03, 2020. Depositors in Yes Bank will now be allowed withdrawal of only up to Rs50,000 until the review and assessment process is completed by the RBI. Here are 12 points you must know about Yes Bank moratorium; as a depositor or as an investor.

Why has the withdrawal limit been imposed so suddenly by the RBI on Yes Bank?
Yes Bank had been under stress for some time due to high levels of NPAs and low capital base. Yes Bank’s capital base was just above the Tier 1 level and hence needed to raise funds urgently to be able to carry on. Over the last few months, the bank had been trying to raise $2 billion but with little success.

What if I have issued cheques on Yes Bank that are yet to be cleared or if I have an ECS for SIP of a mutual fund with Yes Bank?
After March 05, Yes Bank will not be permitted to honour any cheques or ECS mandates. Hence, your cheques will not be cleared and you need to call up the payee and intimate them accordingly. In case of ECS mandates, you will have to change the bank mandate for the ECS to be able to continue the same.

I had purchased a demand draft (DD) on Yes Bank on March 03, 2020 and sent it across to a vendor? Will that DD be still valid?
RBI has already clarified that all Demand Drafts and Pay orders issued before 8 PM on March 05, 2020, will be honoured. Going ahead, no fresh drafts or pay orders can be now issued by Yes Bank. But you don’t have to worry about DDs already issued by Yes Bank.

What about the existing CEO and the Board of Directors of Yes Bank? Will they still be involved in running the bank?
No, they will not be involved any longer. The RBI has superseded the board of Yes Bank and that means the existing board stands terminated. Prashant Kumar, the former CFO of SBI has taken charge as administrator of Yes Bank and all future decisions will be based on his recommendations.

I have four bank accounts with Yes Bank and my wife has 2 accounts with Yes Bank. Can I withdraw an overall amount of Rs50,000 from each of these accounts?
No, that will not be possible. RBI has clarified that the limit of Rs50,000 applies to an individual identified by a unique PAN. So you can withdraw Rs50,000 and your wife can withdraw Rs50,000 till April 03, 2020.

What if there is an emergency expense like my daughter’s marriage and my money is locked in Yes Bank? What can I do in such circumstances?
The RBI has made a special provision in the order that in such emergencies like medical needs, marriage expenses and education expenses, the limit can be increased to Rs5 lakhs per individual subject to the claim being backed by adequate evidence and documentation.

What happens to investors who have invested in FDs or bonds of Yes Bank over the last few years and are still holding?
Bank deposits will come under the overall restriction of Rs50,000 and this will include FDs also. However, all these deposits will be covered under deposit insurance. Bonds are a market linked product and that will be treated differently.  We will have to wait for the administrator to make an assessment and make recommendations.

What happens if I am holding shares of Yes Bank. Will I get an exit from the bank?
That is a tough question because it will eventually depend on how much the share is worth or at what price the eventual acquirer takes over the bank. But our suggestion is that you must not be too optimistic about getting value on your shareholdings in Yes Bank.

I had taken loan against shares from the bank. The loan has been repaid but I am yet to get back my hypothecated shares in my demat account?
The RBI order is clear that if the loan is repaid in full then any shares or other assets hypothecated can be returned to the customer. Hence, you need not worry about the shares you have given as collateral.

I have Rs1 lakh in my Yes Bank account and I have an Rs80,000 personal loans outstanding. Can I withdraw Rs50,000 from the bank as stated by RBI?
That will not be possible. The RBI will only allow net withdrawals from your deposit account after adjusting for outstanding loans and also for the guarantees given by you. In the above case, you will only be allowed to withdraw up to Rs20,000.

Is SBI taking over Yes Bank?
There is no official confirmation yet. The first step is for the administrator to assess the assets and liabilities of the bank and only after the valuation of the bank can be determined for sale to another buyer.

What happens to the employees of Yes Bank and their salaries?
RBI has allowed the bank to pay routine expenses like rents and salaries subject to RBI approval. We need to await the full restructuring plan.

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