‘Yes Bank’ is the 4th largest private sector bank in India, but now it is seriously trapped in the liquidity crisis and become bankrupt. Yes Bank, we have been hearing about how money circles in banks and how it circled in a bank since two days. The name of the bank is ‘Yes bank’. What exactly happened to this bank and why is it in the news now? Everyone out there are discussing that this Yes Bank has become bankrupt and would be closed soon. They are praying that they should at least get their amount back.
RBI’s control of Yes Bank
RBI has taken ‘Yes bank’ under its control, recently. They have placed this ‘Yes Bank’ under the” Restructuring Scheme” because of the situation which lingered in the bank. This ‘Restructuring Scheme” is to bring the situation under control in 30 days.
SBI has volunteered to invest a part in ‘Yes bank’. It will take over the whole management by investing around 2400 crores and would acquire 49% of the ‘Yes bank’ shares. Meanwhile Mr. Prashant Kumar, Former Deputy Managing Director of CFO of the State Bank of India is appointed as the ‘Yes Bank’s’ Administrator, by the RBI.
New rules from RBI
New rules have been set up immediately by the RBI, that the limit for withdrawal of money is only 50K and beyond that they would not be able to withdraw. Let’s see as to what actually happened to the ‘Yes bank’.
About ‘Yes Bank’
‘Yes Bank’ is the 4th largest private sector bank in India, but now it is in the mire of crisis. ‘Yes bank’ is seriously trapped in the liquidity crisis now mainly due to two reasons. The first one being the NPAs – Non- Performing Assets.
Several borrowers of ‘Yes Bank’ have become defaulters of the loans taken. All those who deposited money have started withdrawing their money from the bank together. On the other hand, 17K crores have changed to non recurring arrears, means those who had taken loans have not returned their money and others are withdrawing huge amounts.
Now the bank is not in the comfort zone, so that it can pay back to the customers or the depositors their money, which has made all the difference.
Reality on Bankrupt
Now everyone has a big question, Is ‘Yes bank’ at a huge loss? The answer is a huge NO. It is just that the depositors’ money is blocked because the loans granted to others are becoming bad.Moving into financial terminology, according to the audited balance sheet of 2018-19, the deposits are around 2.26 lakh crores.
The amount which the bank has to receive from the debtors is around 2.36 lakh crores. Now the deposits value has decreased to 2.09 lakh crores, which implies that the amount which vests in the bank is lesser than the loans given to the debtors.
Should the depositors worry?
The bank can give away the amount to its depositors only when the whole debts are cleared and then the bank will have excess amount in it. But what is the situation of the depositors now when Yes Bank become bankrupt?
The depositors need not worry as the bank has more assets than its liabilities. Even in the worst situation of closing the bank, each person will be insured for about 5 lakhs. That means, the government will pay back your money if the bank is incapable to do so.
Few more days
When RBI has decreased the withdrawal limit to 50k, from then bank debit cards, credit cards, net banking and even PhonePe app is not working. So whoever wants to withdraw more than 50K from the bank have to wait till 3rd April, 2020 and bear with the struggles. RBI may give some relaxation if there is some kind of progress and if the situation comes under control.
Let’s wait and watch, how our FM Nirmala Sitharaman or RBI will work towards solving the situation of bringing back Yes bank out of this crucial crisis.
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