The Reserve Bank of India late Thursday evening restricted withdrawal from Yes Bank at Rs 50,000 for the next one month. The restriction will remain in place until April 3, 2020.
In a press release, RBI said that the financial position of Yes Bank has undergone a steady decline due to the bank's inability to raise capital to address potential loan losses and resultant downgrades.
Former SBI CFO Prashant Kumar will be the administrator during this period. An RBI statement said the regulator was doing so in 'public interest.'
"This has been done to quickly restore depositors' confidence in the bank, including by putting in place a scheme for reconstruction or amalgamation," the RBI release stated.
While the RBI has told Yes Bank customers not to worry, the ground reality is quite different
Yogesh Pawar, a freelance journalist, told Free Press Journal that his primary account is with Yes Bank. Pawar's mother is terminally ill, and his father is 87 years old. "I have to worry about medical bills. I have Rs 76,000 in the bank, and I'm trying to figure out a way to withdraw Rs 50,000," he told Free Press Journal, adding that it's difficult to physically visit a bank as he has to take care of his mother.
A Yes Bank user, who didn't want to be named, said she has a salaried account with the bank. She lamented that despite having less than Rs 20,000 in the bank, she is unable to withdraw it online. "I have friends who also have accounts with Yes Bank and we're worried about the money. I will have to physically visit the bank to see what can be done now," she said.
She added that she like many of her friends pay rent in a city like Mumbai, and while she has transferred her money into another bank account, others are not quite lucky.
Currently, the RBI has said that while the withdrawal cap is Rs 50,000, there are a few exceptions to the rule. You can withdraw up to Rs 5 lakh in case of a medical emergency, higher education, for marriage, and other unforeseen emergencies. However, given the situation of existing customers, it's doubtful how much they will be able to take out of the bank.