YES Bank share price tanks 55% as RBI supersedes board, caps withdrawal limits

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New Delhi, May 6, 2020: Shares of YES BankNSE -54.89 % tumbled 55 per cent in Friday’s trade after the banking regulator took over its board and imposed a month-long moratorium.

The Reserve Bank of India (RBI) also put a cap on cash withdrawal from the bank, saying customers cannot withdraw more than Rs 50,000 over next one month.

This is the first time that the central bank has taken such drastic action with respect to a big bank since July 2004 when the regulator got state-run Oriental Bank of Commerce (OBC) to take over Global Trust Bank to rescue the private sector lender.

The RBI action follows the lender’s inability to raise funds that would have helped it provide against loan losses.

Prashant Kumar, former deputy managing director at State Bank of India, will be the administrator of Yes Bank, RBI said.

RBI blamed lax governance practices in YES Bank behind its rationale to supersede the board. “In the absence of a credible revival plan, and in the public interest and the interest of the bank’s depositors, (the RBI) had no alternative but to apply to the central government for imposing a moratorium,” the central bank said on Thursday.

On Thursday, the Street kept buzzing on takeover bid by SBI and LIC for YES Bank. As per reports, both state-owned entities are likely to acquire 49 per cent in the private lender.