Yes Bank all set to lift deposit withdrawal cap

CEO designate says liquidity not a problem; ATMs fully loaded; lender eyes recovery of up to ₹8,500 crore next year

Private sector lender Yes Bank has assured all its customers they need not worry about their deposits after the moratorium is lifted, as branches and automated teller machines (ATMs) will have adequate cash.

The moratorium, which was imposed on March 5 with deposit withdrawals capped at ₹50,000, will be lifted on Wednesday at 6 p.m. This is the first time in banking history that a moratorium will be lifted from a commercial bank as, in all previous cases, such lenders were merged with other banks.

Watch | Yes Bank crisis explained

“We have taken adequate precautions. All our ATMs are full with cash. All our branches have adequate supply of cash. So, from Yes Bank’s side, there is absolutely no issue on the liquidity front,” said Prashant Kumar, the Reserve Bank of India-appointed administrator of the bank. He will take charge as the MD and CEO of the reconstructed bank on March 26, along with a new board. The RBI has assured liquidity support to the bank, if required, after the moratorium is lifted.

Allaying concerns that the depositors will rush to withdraw their deposits after the moratorium is lifted, Mr. Kumar said only a third of the depositors have withdrawn the full amount available during the moratorium period. In the past three days, more money came into Yes Bank compared with the withdrawals, he said.

But Mr. Kumar acknowledged that deposits were his biggest concern.

“We want to build a granular retail deposit franchise and we need to move away from the dependence on bulk deposits,” he said.

As part of the reconstruction plan, the bank has received investments from eight banks, including the State Bank of India, which will be largest shareholder with a 48% stake.

The capital adequacy ratio of the bank, which had dipped below the regulatory requirement, will be addressed by this capital infusion.

Regulatory requirement

“If we take into account the the capital infusion of ₹10,000 crore and written down value of AT1 bonds, then, we are above the regulatory capital requirement,” Mr. Kumar said. The bank would raise more funds before it finalises the annual results, that is, during the first quarter of FY21.

“[As much as] 80% of the funds raised in the next year will be for growth,” he said, adding the bank is also expecting a strong recovery in the next financial year — to the tune of ₹8,500 crore.

Though the revival scheme of Yes Bank mandates that the SBI cannot reduce its stake below 26% in the next three years, SBI chairman Rajnish Kumar said not even a single Yes Bank share it holds would be sold before the three-year lock-in period ends.

The SBI has appointed two nominees on the board of Yes Bank — Partha Pratim Sengupta, deputy managing director and chief credit officer and J. Swaminathan, deputy managing director, strategy and chief digital officer.

On Tuesday, the Yes Bank stock surged 58% on the BSE to ₹58.65 per share after Moody’s upgraded the bank’s ratings to a ‘positive’ outlook on Monday.

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Printable version | Jul 12, 2020 12:44:54 PM |

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