RBI imposes 'moratorium' on Yes Bank; withdrawals capped to Rs 50,000

Yes Bank has been placed under "moratorium" with the Reserve Bank of India(RBI) capping depositor withdrawals at Rs 50,000 per account for a month.

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"The Reserve Bank came to the conclusion that in the absence of a credible revival plan, and in public interest and the interest of the bank's depositors, it had no alternative but to apply to the central government for imposing a moratorium under Section 45 of the Banking Regulation Act, 1949," the RBI said in a statement.

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RBI said Yes Bank was in talks with investors including private equity firms to infuse capital.

"These investors did hold discussions with senior officials of the Reserve Bank but for various reasons eventually did not infuse any capital," RBI said, adding,"since a bank and market-led revival is a preferred option over a regulatory restructuring, the Reserve Bank made all efforts to facilitate such a process and gave adequate opportunity to the bank's management to draw up a credible revival plan, which did not materialise," the statement said.

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In the statement, India's central bank said the move was necessary to restore depositors' confidence after the bank's inability to address potential loan losses and downgrades.

"The bank has also experienced serious governance issues and practices in the recent years which have led to steady decline of the bank," the Reserve Bank of India informed.

In January, Uttam Prakash Agarwal, an independent board member with Yes Bank had resigned from the lender's board and stepped down as head of its audit committee citing major corporate governance concerns.