Account Holders Jittery As Yes Bank Netbanking Fails

Account holders at Yes Bank, who were trying to transfer money after the RBI placed a cap of Rs 50,000 could not do so. "Due to heavytraffic, on our netbanking, we are unable to process your request", a message read for account holders.

Crisis At Yes Bank will further cripple confidence in the banking sector, which is plagued with rising non performing assets and problems at PMB Bank earlier. The industry has for years been plagued by non performing assets and things only seem to be getting worse.

Trouble had mounted for Yes Bank in the last few quarters, with rising non performing assets. Deposit holders in private sector banks may now getting increasingly jittery, given that the size of Yes Bank, which is the nation's fourth largest private sector bank.

"In exercise of the powers conferred under 36ACA of the Banking Regulation Act 1949, the Reserve Bank has, in consultation with Central Government, superseded the Board of Directors of Yes Bank Ltd. for a period of 30 days owing to serious deterioration in the financial position of the Bank. This has been done to quickly restore depositors' confidence in the bank, including by putting in place a scheme for reconstruction or amalgamation. Shri Prashant Kumar, ex-DMD and CFO of State Bank of India has been appointed as the administrator under Section 36ACA (2) of the Act," the RBI said in a release.

However, the Reserve Bank of India has assured depositors of the bank that their interest will be fully protected and there is no need to panic.
"In terms of the provisions of the Banking Regulation Act, the Reserve Bank will explore and draw up a scheme in the next few days for the bank's reconstruction or amalgamation and with the approval of the Central Government, put the same in place well before the period of moratorium of thirty days ends so that the depositors are not put to hardship for a long period of time".