Will Yes Bank function smoothly from Wed? Doubts remain

Lifting of deposit withdrawal moratorium on March 18 could open flood gates and will require a calibrated approach along with active support and signaling from the RBI, government and investor banks.

With moratorium being lifted from Wednesday, the crisis-hit Yes Bank might see a heavy withdrawal of deposits by customers, according to a report.

On March 5, the Reserve Bank of India (RBI) imposed a moratorium on the troubled private sector lender, including capping withdrawals at Rs 50,000 per depositor.

Lifting of deposit withdrawal moratorium on March 18 could open flood gates and will require a calibrated approach along with active support and signaling from the RBI, government and investor banks, said Emkay Alpha Portfolio in its report.

The moratorium would be lifted by 6 pm on March 18, as per the reconstruction scheme notified by the government on Friday.

However, Yes Bank CEO-designate Prashant Kumar said there are absolutely no worries on the liquidity front and that complete operational normalcy would be restored from 6 pm on Wednesday.

"We have made adequate precautions. All our ATMs are full with cash. All our branches have adequate supply of cash. So, from Yes Bank side, there is absolutely no issue on the liquidity front," Kumar said.

According to rating agency Crisil the moratorium would pose challenges to companies that have cash credit facilities and current accounts with Yes Bank.

The ensuing financial stress can impact their ability to service financial obligations on time in spite of sufficient liquidity, it said.

Companies having material banking relationship with Yes Bank could face financial stress, which does not reflect their inability or unwillingness to meet obligations.

Many retail customers are waiting for the first opportunity to withdraw their hard earned money from the bank.

SBI cannot reduce its stake in the bank to below 26 per cent for a period of three years, while other investors and existing shareholders will have a lock-in period of three years for 75 per cent of their investment in Yes Bank.

However, the lock-in period will not apply to shareholders with less than 100 shares.

The Yes Bank Reconstruction Scheme 2020 came into force on March 13, 2020, the gazette notification had said.