RBI capped Rs 50,000 as withdrawal limit of YES Bank customers: What is YES BANK CRISIS in news?

On March 5, 2020, the Reserve Bank of India imposed a month-long moratorium. Also, the Apex Bank has imposed withdrawal restrictions of Rs 50,000 to the customers. However, in case of medical emergencies and higher education fees, the restriction has been increased to Rs 5 lakhs.

Highlights

The Reserve Bank has taken actions as the Yes Bank is currently unable to raise funds that will help against loan losses. RBI has selected SBI (The State Bank of India) to inject capital into Yes Bank. SBI is to conduct viability assessment in buying stakes at Yes Bank.

What is Moratorium?

Moratorium is a temporary suspension of an activity or business. Though RBI has powers to impose restrictions on financial activities of banks in India, it has no powers to impose a moratorium. Moratorium has been imposed on the bank by GoI under recommendation of RBI.

Banking Regulation Act

The Reserve Bank of India has powers to take above actions under Banking Regulation Act, 1949. Section 35A of the act provides powers to put withdrawal restrictions on any bank in India.

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