After Yes Bank was placed under a moratorium, digital payments were impacted as PhonePe, which depends on the cash-strapped lender for its transactions, could not operate.
It can be noted that the bank's own net banking facilities have not been operational since last evening. Other fintech operators who rely on Yes Bank to settle their transactions are also down.
"We sincerely regret the long outage. Our partner bank (Yes Bank) was placed under moratorium by RBI. Entire team's been working all night to get services back up as soon as possible," the app's chief executive Sameer Nigam tweeted early in the morning.
He added that the app hopes to be live in a few hours.
PhonePe, one of the country's largest digital payment platforms, is dependent on Yes Bank to process its transactions.
Yes Bank was placed under a moratorium on Thursday evening, with the RBI capping deposit withdrawals at Rs 50,000 per account for a month and superseding its board.
Yes Bank will not be able to grant or renew any loan or advance, make any investment, incur any liability or agree to disburse any payment. However, for purposes like marriage, and health emergencies, exceptions can be made, the RBI said.
The Reserve Bank of India assured YES Bank depositors that their interest will be fully protected and that there is no need to panic.
The bank will also be able to pay salaries to its over 20,000 employees and also rents, it clarified.
The regulatory actions, undertaken by the RBI and the government, came hours after finance ministry sources confirmed that SBI was directed to bail out the troubled lender.
For the next month, Yes Bank will be led by the RBI-appointed administrator Prashant Kumar, an ex-chief financial officer of SBI.
(Disclaimer: Additional background information has been added to this PTI copy for context.)
(Edited by Saheli Sen Gupta)