On the NSE, the Yes Bank counter clocked volumes of 70.56 crore shares as against an average volume of 19.16 crore shares in the past one quarter.
After opening at Rs 33.15, the stock slumped to the day’s low of Rs 5.65 in mid-morning trade. However, buying emerged at lower levels and pushed the stock above Rs 15 a share mark.
As on 12:56 IST, the Yes Bank counter had total buy orders for 13.66 crore shares and total sell orders of 9.79 crore shares on the NSE.
Yes Bank was placed under a moratorium on late Thursday (5 March 2020), with the Reserve Bank of India (RBI) capping depositor withdrawals at Rs 50,000 per account for a month and superseding the board with immediate effect.
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. Accordingly, the Central Government has imposed moratorium effective from today (5 March), RBI said in a statement.
RBI assured the depositors of the bank that their interest will be fully protected and there is no need to panic. RBI said it 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, it added.
The board of Yes Bank has also been superseded with immediate effect, RBI said in a late evening statement. It also appointed former chief financial officer (CFO) of SBI, Prashant Kumar as the administrator of Yes Bank.
In exercise of the powers conferred under 36ACA of the Banking Regulation Act 1949, RBI has, in consultation with Central Government, superseded the board of directors of Yes Bank for a period of 30 days owing to serious deterioration in the financial position of the bank.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. Prashant Kumar, ex-DMD and CFO of State Bank of India has been appointed as the administrator under Section 36ACA (2) of the Act.
RBI said that the financial position of Yes Bank has undergone a steady decline largely due to inability of the bank to raise capital to address potential loan losses and resultant downgrades, triggering invocation of bond covenants by investors, and withdrawal of deposits. The bank has also experienced serious governance issues and practices in the recent years which have led to steady decline of the bank.
Separately, in a gazette notification, the finance ministry said it has approved the central bank’s application to place the Yes Bank under moratorium up to 3 April 2020. During this period, the withdrawal by a depositor of Yes Bank is capped at Rs 50,000. However, the central bank is authorised to allow the bank to make higher payment to a depositor only under certain exceptional circumstances, including medical grounds.
Meanwhile, ratings agency Moody’s Investors Service reportedly said on Friday that RBI’s moratorium and withdrawal cap on Yes Bank is credit negative, and the lack of coordinated action action highlights continued uncertainty around bank resolutions.
