Union Finance Minister Nirmala Sitharaman on Friday assured the public that no depositor will incur a loss because of the moratorium imposed on Yes Bank, NDTV reported.
Addressing the media in the national Capital, Sitharaman said, “The Reserve Bank of India Governor has assured me there will be no loss to any Yes Bank depositor. Your money is safe.” The central bank on Thursday imposed a moratorium on cash-strapped Yes Bank, and restricted withdrawals at Rs 50,000 for each account.
The bank’s board has also been superseded for 30 days with immediate effect. Former State Bank of India Chief Financial Officer Prashant Kumar has been appointed the administrator of Yes Bank.
Earlier in the day, RBI Governor Shaktikanta Das said the central bank will take very swift action to come up with a scheme to revive Yes Bank, PTI reported.
Addressing the media on Friday, the RBI chief said, “The 30 days which we have given is the outer limit, you will see very swift action from the RBI to revive Yes Bank.” He added that the decision of imposing a moratorium was taken at “larger level” to maintain the resilience of the Indian financial sector. “It is aimed at ensuring safety of financial system.”
Das said the RBI has issued two press notes on Yes Bank explaining why the decision was made, CNBC-TV18 reported.
On Thursday, the RBI in a statement said, “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 assured depositors of Yes Bank that their interests will be completely protected and said there was “no need to panic”. “The Reserve Bank 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,” the statement added.
Meanwhile, the Indian stock markets plunged over 3% in opening trade on Friday amid continued fears over the novel coronavirus outbreak and the crisis in cash-strapped Yes Bank. The BSE Sensex nosedived 1,459.52 points to 37,011.09 in the opening session, while the National Stock Exchange Nifty tanked 362.30 points to 10,906.70. It recovered slightly by 10.35 am. The Sensex was 1,187.87 points, or 3.09%, down at 37,282.74 and the Nifty was 355.70 points, or 3.16%, lower at 10,913.30.
Das on Friday said the central bank will take all necessary measures to also secure the economy from the challenges of the virus outbreak. He said there were enough resources at the disposal of the country to fight the crisis, given the robust forex reserves. “We will be able to respond to the challenges emerging out of the coronavirus epidemic. The RBI stands ready to intervene in whatever way required to respond to epidemic challenges.”
At the same time, he also called for the International Monetary Fund to launch non-stigmatised currency swap lines to ease the liquidity pressures globally. Das said that while he expected a slowdown in global growth because of the coronavirus, all the central banks were working in close coordination to reduce its impact.
However, he admitted that there will be an impact on certain sectors of the Indian economy that are dependent on China, but added that all mitigatory steps were being taken to counter that. “The impact on India will be limited as our economy is not very integrated with the global value chain. [And] to that extent we will be insulated.”
The number of novel coronavirus cases across the globe rose to 97,510 as of Thursday night. Across the 85 countries with infections so far, 3,345 people have died. There are 31 infections so far in India.