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The Reserve Bank of India (RBI) on 5 March imposed a moratorium on Yes Bank till 3 April. As per the moratorium, one can withdraw up to ₹50,000 across various bank accounts with Yes Bank including your savings, deposits and current accounts.
Basically, this means that even if one has a savings bank account and two fixed deposits with the bank, the maximum amount that can be withdrawn would still be ₹50,000.
However, in case of special circumstances or emergencies depositors may be allowed to withdraw up to ₹5 lakh or the balance in the account whichever is lower but it will have to be approved by a competent authority as per the notification. The details on the same are awaited.
The moratorium has imposed in the wake of deteriorating financial health of the bank, with the RBI superseding the board of directors of the private sector lender.
So, what can one do if one has an account with Yes Bank linked to equated monthly installments (EMIs), systematic investment plans (SIPs), insurance premium? You are likely to face a problem in case the amount to be deducted is higher than ₹50,000 towards these payments.
“Right now, the cap will be applicable on all the withdrawals as well as deductions from the Yes bank account," said Aditya Mishra, founder and CEO, Switchme.in.
“You will have to quickly make alternative arrangements if your EMI or any other payment is due to be debited from the Yes bank account," said Raj Khosla, managing director, MyMoneyMantra.com.
Typically, those who have their salary account with the bank are likely to be hit the most. Given the grim situation, the human resource (HR) department of various companies will likely take steps to provide alternatives to employees so that future salaries are not blocked. You can also speak to HR.
You will have to give your bank an alternative ECS mandate so that you don’t face problems towards payment of your future EMIs.
But suppose if you had an EMI payment of more than ₹50,000 due today, it is likely to have bounced. This is going to impact your credit score as well. “There is nothing much one can do at this stage but yes one can inform the credit bureau through their bank later that it has happened due to this special case and get it rectified," said Khosla.
Similarly, in case there are payments due towards SIP and insurance premium, one will face problems as the limit will apply on them also.
Similarly, you need to take steps so that your future income through mutual fund redemptions or dividends don’t get blocked.
Several fund houses have tried to reach out to their customers through social media and requested them to provide alternative bank account details so that the money from the redemption of the mutual funds doesn’t get blocked.
In a tweet Nilesh Shah, MD & CEO, Kotak Mahindra Asset Management Company Ltd. on Thursday said, “If clients want to change their Redemption bank account mandate from Yes Bank to any other bank they can send a request to Mutual@kotak.com. We shall process the request for tomorrow's redemptions so that their money isn't blocked."
Similarly, Radhika Gupta, CEO of Edelweiss Mutual Funds also assured their customers that they will make sure that redemption proceeds don’t go to Yes Bank account and has asked them to reach out the fund house on firstname.lastname@example.org.
Experts are advising people not to panic but take quick steps so that they can manage the situation better. “The RBI has released initial guidelines on the moratorium and additional details are still awaited. So I think it is important that customers do not panic at this stage but wait for further clarifications from the government and the RBI on the next steps. The RBI took the decision for the moratorium in consultation with the government to protect depositors' interest and I firmly believe that they will uphold the interests of the retail customers," said Adhil Shetty, chief executive officer, BankBazaar.
“Generally speaking, people shouldn’t panic as RBI will take every possible step to safeguard the interest of the depositors" said Khosla. However, at an individual level, YES customers should assess their exposures and immediately take actions to safeguard their commitment," said Khosla.