The customers of Yes Bank got a big relief on Wednesday when the Reserve Bank (RBI) lifted all restrictions on the bank at 6 PM, after which the bank resumed all its services to customers. The RBI had dissolved the board of the bank on 5 March and put a moratorium on withdrawals of above Rs 50,000 per customer after it plunged into financial crisis due to heavy NPAs mostly due to the alleged fraudulent acts of its founder Rana Kapoor.
The government had notified Yes Bank’s restructuring plan last week after which SBI invested considerable capital in the bank, buying a large stake in it.
Announcing the resumption of its services, Yes Bank tweeted, “Our banking services are now operational. You can now experience the full suite of our services. Thank you for your patience and co-operation.”
Moratorium ends, all services resume
The government had said in the notification issued last Saturday that this moratorium on the bank would be lifted at 6 PM on 18 March and it did. Yes Bank had tweeted the same day, saying it would start all its banking services from 6 PM on Wednesday, 18 March.
Yes Bank had said that day that on 19 March 2020, the customers could visit any of its 1,132 branches across the country and avail all its services.
Since 2017, the RBI had been observing governance issues, weak compliance and incorrect asset classification in Yes Bank then under the control of Kapoor. The central bank had suggested a change in the messed up bank’s management after marking several risky lending decisions.
The RBI made these decisions in the interest of the bank. The government appointed a new CEO in September 2018.
Keeping in view the findings of irregularities by investigating agencies, the RBI then proposed a restructuring plan for Yes Bank, which was approved by the union cabinet.
The SBI, which is now the largest stakeholder of Yes Bank, cannot reduce its stake in the latter to less than 26% for three years as part of a restructuring plan whereas other investors and existing shareholders cannot sell 75% of their stakes for the same period. These three years make the lock-in period.
However, the rule of the lock-in period will not apply to shareholders holding less than 100 shares.
Prashant Kumar as CEO
The new board of Yes Bank consists of Prashant Kumar, CEO and MD, former financial officer and deputy managing director of SBI. Former non-executive chairman of Punjab National Bank Sunil Mehta is the non-executive chairman and Mahesh Krishnamurthy and Atul Bheda the non-executive chairmen.
Yes Bank lost nearly Rs 19,000 crore
The government notification said that the order of moratorium issued earlier for the bank reorganised by the government would expire at the 18th hour on the third day of the scheme’s implementation. Before this, Yes Bank had recorded a net loss of Rs 18,654 crore during the period.
The losses increased due to higher provisions for loans given to the bank.
A year earlier, the bank had reported a profit of Rs 1,001.8 crore in the same quarter in 2018-19.
Suit against founder
The Enforcement Directorate (ED) has registered a case of money laundering against Yes Bank founder Kapoor. ED officials suspect that he misused his position and compromised with Yes Bank’s interests while holding the post of managing director.