When the Reserve Bank of India (RBI) banned Yes Bank, many compared it with the failure of Punjab and Maharashtra Co-operative (PMC) bank by 3 April 2020, limiting the withdrawal to 50,000. But if you look at the announcements of RBI and Finance Ministry, both have taken measures keeping in mind the interest of small depositors.
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Many banking experts feel that there will also be a quick solution to the Yes Bank crisis soon. “The government and RBI should find a solution soon. The positions of PMC Bank and Yes Bank are different and not comparable. Harsh Roongta, a Mumbai-based SEBI-registered financial advisor and former banker, said the government cannot allow such a big bank to fail.
PMC Bank had deposits in excess of ₹ 11,000 crore while Yes Bank has deposits in excess of ₹ 2 lakh crore.
Experts also pointed out the communication of State Bank of India (SBI) to the stock markets. The country's largest bank said that during the bank's central board meeting on March 5, a principled approval has been given by the board to explore the investment opportunity in Yes Bank.
According to Rungta, after amending the insurance limit on deposits of banks in the recent budget, the definition of small depositors is now with those 5 lakhs in the bank. “These small depositors should not worry or act in frustration. Depending on the developments, there should be a rescue plan for small depositors, "Rungta said. He also pointed out that there is uncertainty over what will happen to large depositors holding more than 5 lakhs of itors with the bank.
When the government limited the withdrawal to the bank to ₹ 50,000, it also said that higher withdrawals are possible for depositors in case of emergency. "The Reserve Bank may, by a general or special order, permit the said banking company to pay its depositors an amount of uniform 50,000 to meet unforeseen expenses," the Finance Ministry notification said.
Depositors may withdraw higher amounts in relation to medical treatment or dependents; For the cost of higher education of self or dependent; To pay mandatory expenses in connection with marriage or other ceremonies; And in any other unavoidable emergency.
These measures are very different from the events in the case of PMC Bank where there is no provision for depositors to withdraw more than the amount notified by RBI from time to time. There were even some deaths as depositors could not withdraw more than the notified amount for their medical treatment.
For now, it is best that small depositors should wait for the RBI announcement in defense of Yes Bank.
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