The Indian banking regulator, the Reserve Bank of India (RBI), had suspended the board of Yes Bank – a private sector bank on 5 March and imposed a moratorium on all transactions. The RBI’s decision was due to a serious deterioration in the bank’s financial position.
The Indian government has announced a rescue plan for Yes Bank in a gazette notification. The plan was put forth by the Indian ministry of finance immediately after the Union Cabinet approved it during the day on Friday.
The notification states that India’s largest public sector lender the State Bank of India (SBI) will invest 47 percent in Yes Bank. The SBI’s investment in the beleaguered bank amounts to around $1.4 billion.
Along with SBI, other major private sector banking players in India have evinced interest in investing in Yes Bank.
With the rescue plan, or the reconstruction plan, as the Indian government prefers to call it, now in place, the moratorium imposed by RBI will be lifted on 18 March.
Simply put, with the lifting of the moratorium, Yes Bank customers will be able to undertake transactions of any value. The clearance of cheques, which is currently not happening will also start taking place starting 18 March.
