: RBI extends Rs 60,000-cr credit line to Yes Bank #FinanceIndia #StockMarketNEWS #Business New Delhi: To tide over liquidity issue, the Reserve Bank of India (RBI) has extended Rs 60,000-crore credit

@StockMarketNEWS Sat 21 Mar, 2020

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RBI extends Rs 60,000-cr credit line to Yes Bank #FinanceIndia #StockMarketNEWS #Business
New Delhi: To tide over liquidity issue, the Reserve Bank of India (RBI) has extended Rs 60,000-crore credit line to Yes Bank so that it meets obligation of depositors, sources said.



 This is in line
with assurance given by RBI Governor Shaktikanta Das on Monday saying the
regulator was ready to offer liquidity if required after lifting of moratorium.



 â€œI would like to
mention that Yes Bank has enough liquidity to meet any requirement. If there is
a requirement, the RBI will provide necessary liquidity support,� he had said.



 â€œNever in the
history of banks (in India) have depositors lost money. The point is,
depositors’ money is absolutely safe,� Das also said.



 As per Section 17
of RBI Act 1934, the central bank can provide liquidity support to any lender in
the form of loans and advances against collateral such as stocks, funds and
securities (other than immovable property) in which a trustee is authorised to
invest trust money by an Act of Parliament.



 According to the
sources, the RBI’s assessment found Yes Bank had liquidity issues but no
solvency problem or any other issue.



 The line of
credit, however, comes with a caveat the first such exercise by the central
bank, the sources said.



 Since the RBI is
the ‘lender of the last resort’, as per terms of arrangement, Yes Bank would
have to exhaust immediate liquid assets before accessing this fund, the sources
added.



 On March 5, the
RBI had imposed a moratorium as well as superseded the board of the then
struggling Yes Bank. Deposit withdrawals were capped at Rs 50,000 per account
apart from other restrictions.



 Subsequently, the
government on March 13 notified a rescue plan for Yes Bank, led by State Bank
of India (SBI) and joined by other lenders, as it looked to shield the banking
sector from a widespread crisis.



 The private sector
lender has got support from its largest investor State Bank of India (SBI),
which holds 48.21 per cent stake in the bank.



 SBI alone has
invested Rs 6,050 crore into the bank. ICICI Bank and HDFC (Rs 1,000 crore
each), Axis Bank (Rs 600 crore), Kotak Mahindra Bank (Rs 500 crore), Bandhan
Bank and Federal Bank (Rs 300 crore each) and IDFC First (Rs 250 crore) have
invested in Yes Bank.



 Yes Bank’s deposit
base eroded by Rs 72,000 crore to Rs 1.37 lakh crore as of March 5, 2020. The
same was at Rs 2.09 lakh crore as of December 31, 2019, as per data shared by
the bank last Friday.
The post RBI extends Rs 60,000-cr credit line to Yes Bank appeared first on The Navhind Times.

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