In a major decision taken by the union Govt and the RBI on March 5 to limit withdrawal from accounts of Yes Bank customers which led to panic in the financial ecosystem in the country.
Today, Let us discuss the facts and figure of the situations and also know what exactly went wrong with the Rana Kapoor led Bank and how it happened?
What is the Withdrawal Cap?
Presently RBI has set a cap of Rs 50,000/- per account till April 3rd except exigency cases. The clearing house is not allowing the bank in settlement.
Well, in a major relief to that: As the government has already notified the reconstruction scheme for capital-starved Yes Bank. The restrictions on withdrawals from its accounts will be lifted in “three working days,” the Finance Ministry said in a notification.
What actually went wrong?
Most alarming factor to be noted that, Loan portfolio of the bank has gone up by a massive 334% between the years 2014-19.
Excluding the fact that Yes Bank has suppressed its NPA, top sources in the financial industry has reported that at least 44 companies, belonging to 10 large Indian business groups, accounted for bad loans of over Rs 34,000 crore of the Bank.
How Bad is the Bad Loan Situation?
The total exposure of Yes Bank is around 2.25 lakh crore but of that, the non-performing assets (NPA) are reportedly around Rs 42,000 crore. As per officials of the Enforcement Directorate (ED), interrogating Yes Bank Founder, of these Rs 42,000 crore loans that turned into NPAs, Rs 20,000 crore were allegedly offered to some corporate companies and Non-Banking Financial Companies (NBFCs) on Kapoor’s instructions.
Anil Ambani Group, Essel Group, DHFL, Infrastructure Leasing & Financial Services Ltd and Vodafone are some of those very stressed corporates to whom Yes Bank has been exposed. Talking about the figures, at least nine companies of the Anil Ambani Group accounted for NPAs worth Rs 12,800 crore, at least 16 companies belonging to Subhash Chandra’s Essel Group made up Rs 8,400 crore worth of bad loans of Yes Bank.
What about the revival?
On 6th of March, the RBI released its “draft” revival plan for Yes Bank. Accordingly, State Bank of India could pick up 49% stake, and hold on to at least 26% for the next three years. Moreover Salary and Job of all the staffs are secured for at least a year. Now time will tell how the revival plan actually work.
What to do with your Money / accounts?
From the very first day of the announcement the Finance Ministry has assured that depositors money is completely safe and ” interest of depositors is to be taken care of” and with the announcement of relaxing the withdrawal cap in next 3 days it is very evident that no more fresh harassment is on the way.
But this incident after the PMC bank has one again proved PSBs in the country are doing a much cleaner banking rather than Private sector lenders. If you are doing your banking solely with a private bank, i would request you to rethink and take decision accordingly. Let me know your opinion in the comment section.