The resolution of troubled lender Yes Bank, which was put under moratorium on Thursday, will be completed well within time, Reserve Bank of India Governor Shaktikanta Das indicated on Friday.
The government has placed a moratorium on Yes Bank with effect from March 5 till April 3. Deposit withdrawals have been capped at ₹50,000 during this period.
“The resolution [of Yes Bank] will be done very swiftly, it will be done very fast. The 30 days which we have given is the outer limit. You will see very swift action from the RBI,” Mr. Das said on the sidelines of an event organised by industry body Assocham. He reiterated that the Indian banking system is safe and sound. “Depositors’ interest [of Yes Bank] will be protected,” Mr. Das assured.
Stability of the system
He said the decision on Yes Bank was taken at a larger level, not only to deal with the problem in an individual entity, but also to maintain stability and resilience of the Indian financial and banking sector.
“We stand committed to maintaining stability of the financial and banking sector,” he said.
On the timing of the action on Yes Bank, Mr. Das said there was always a debate over the Reserve Bank of India either acting prematurely or taking too long to act.
“A market-led and bank-led resolution of the problem is always preferable. You have to give time to the bank management to take step and efforts. And the bank did take efforts.” he said. “When we found that we cannot wait and should not wait any longer, we decided to intervene. I think the timing is appropriate,” Mr. Das added.
RBI has superseded the board and appointed the chief financial officer and deputy managing director of State Bank of India Prashant Kumar as an administrator.
