Nirmala Sitharaman assures depositors money in Yes Bank safe
As panicky depositors rushed to withdraw money from Yes Bank whose control was seized by the RBI in a dramatic late-night move, Finance Minister Nirmala Sitharaman on Friday assured depositors that their money is safe and said the central bank was working for an early resolution of the crisis.
The Reserve Bank of India (RBI) on Thursday evening capped withdrawals at Rs 50,000 for the next one month and imposed strict limits on operations at the country's fourth-largest private lender that faced "regular outflow of liquidity" after an effort to raise new capital failed.
"I am in continuous interaction with the RBI. The RBI is fully seized of the matter and has assured they will give a quick resolution," Sitharaman said.
Union Finance Minister Nirmala Sitharaman
She said no depositor will lose his or her money and insisted that the immediate priority is to ensure Yes Bank customers can withdraw money within the stipulated cap.
"I want to assure every depositor that their money shall be safe," she said. "I am constantly in contact with the RBI and the steps that are taken are taken in the interest of depositors, banks, and economy. We are fully seized of the development," she added.
She was talking to reporters after meeting State Bank of India (SBI) Chairman Rajnish Kumar. On Thursday, the SBI board gave its "in-principle" approval to exploring investment opportunities in Yes Bank.
"So I repeat, the depositors can be assured that their money is safe," she said.
Soon after the RBI takeover, depositors thronged Yes Bank ATMs to withdraw money and police had to be deployed in some places to control the crowds. Yes Bank has 1,000 branches across the country.
Refusing to elaborate on her meeting with the SBI chairman, the minister said that "was on a completely different matter".
"RBI governor has given me assurance that there will be an appropriate resolution soon. No depositor will lose (money)," she said. "Reserve Bank has taken cognisance of the problem."
The central bank, she said, has gone through the "process over and over again to find out an amicable solution".
"And that has been over the last couple of months. So it is not as if they have come in suddenly now. We have been monitoring the situation," she said adding the RBI has appointed an administrator who previously was with the SBI.
"Both the RBI and the government are looking at this with all the details before them, not just today. I have personally monitored the situation over the last couple of months with the RBI. Therefore, we have taken a course which will be in everybody's interest," she added.
Yes Bank had been seeking new capital since last year to bolster its ratios and quell questions about its stability due to its exposure to the non-banking finance industry entangled in a prolonged crunch in the local credit market.
The SBI chairman said the resolution to the Yes Bank crisis will come "very shortly". "This is not a sectoral problem. It is a bank-specific problem. The RBI will take all steps to ensure financial stability," he said.
On SBI picking up a stake in Yes Bank, he said the lender already has an in-principle approval for doing so. "If SBI has to pick up a stake in Yes Bank, we have an in-principle approval for that," he said.
Commenting on the crisis at Yes Bank, Alka Anbarasu, Vice President Senior Credit Officer, Financial Institutions, Moody's Investors Service, said, "RBI's moratorium on Yes Bank is credit negative as it affects timely repayment of bank depositors and creditors. While Moody's expects Indian authorities will take steps to prevent the weakness in the bank's viability from significantly impacting its depositors and senior creditors, the lack of a coordinated and timely action highlights continued uncertainty around bank resolutions in India."
(Edited by Suman Singh)