An account with Yes Bank?

     If you have any relationships with Yes Bank

                                        please read on...

                                                            by Rajeev Pathak

                 Now Rana Kapur, Founder and former CEO of Yes Bank is arrested, a restructuring  plan floated by Reserve Bank Of India (RBI) is underway, State Bank Of India (SBI) is gearing up  to invest in Yes Bank Equity Capital to the tune of Rs.2400/- crore, it seems there are all-out efforts from Govt. Of India (GOI) and RBI to save IVth largest private sector bank of the country. It is evident that Government and RBI are all out to protect the larger interest of the country and its financial and banking system. The Yes Bank may be revived in the future just like Unit Trust Of India (UTI) in the past, but what a common man like you and me should do, if one has any relationship with Yes Bank. As of now, Yes Bank has been suspended from Clearing House, so you can not get payment of any cheque or demand draft or ECS drawn on any Yes Bank Account.  As a matter of fact, there are a lot of inconvenience and financial repercussions, if you have any relationship with Yes Bank.  We will discuss such situations and remedies in the following paragraphs. 

1.            As a Depositor:                

                As a depositor, one may have several types of accounts with any bank. In the case of #Savings Bank Accounts, now Yes Bank has permitted its account holders to withdraw from its own or any bank’s ATMs to withdraw up to Rs. 50,000/- during the moratorium period up to April 3,2020. As no ATM will allow  Rs. 50,000/- at a time, one may withdraw in parts from different ATMs or on different dates or through a cheque from a branch. The limit of Rs.50,000/- is applicable for each Customer ID.

                If you have a #Salary  Account with #Yes Bank, it is advisable to shift your salary account to some other bank. If you do not have an account with any other bank, please open a new account with any bank preferably in a #public sector bank, and furnish your new bank details to your employer. It should be done immediately allowing sufficient time for your employer to update their records before salary for March’20  is processed.  This will help you to live life without stress in the coming months.

               In the case of #Current Account holders, the same provision of withdrawal up to Rs.50,000/- is applicable to them also. But here is the catch. In case they have a savings bank and current account, both in the same name and style, they can withdraw only up to Rs.50,000/-. If they do not have an ATM facility, they can withdraw over the counter by writing a cheque. They may also consider opening a #current account with another bank, preferable a #public sector bank for the continuity of their business.

              A #Term Deposit customer may watch the situation for few days and consider shifting to another bank on the maturity of deposits.  Here the silver line is that Finance Minister, RBI, and SBI Chairman, all have assured depositors that their money is safe, so there is no need to panic. Moreover DICGC (Deposit Insurance & Credit Guarantee Corporation) the cover is now enhanced from Re.1 lac to Rs. 5 lacs now.

Bank Mandate for insurance, mutual funds, or loan EMIs.

             Many customers must have given ECS (Debit) instructions to their insurers for insurance premiums, bank mandate to AMCs (Asset Management Companies) for mutual funds SIP, they should immediately give a fresh mandate for a new bank account to avoid ECS returns and resultant bank charges. Likewise, if one  has given a Yes Bank account for ECS (Credit) to companies for dividend or as a default account for the credit of the mutual fund, company deposits, insurance, or any other proceeds, one needs to give fresh bank details to them.

           But there are also various  Trusts, Govt Deptts., Associations, Credit Societies etc who have invested crores of rupees  in Yes Bank, they should  deposit any fresh money in their other bank the account only, also they have no option, but to wait for further relaxation in withdrawal limits.

2.            As a Borrower:  

           If you have taken a loan from Yes Bank, it is advisable to repay your installments and service interest on time. This will help the Bank to recover fast and your account will be saved from slipping to NPA (Non-Performing  Asset) category. 

If you are an Overdraft / Cash Credit Customer, better to apply to some other bank for facilities, but ensure that conduct of your overdraft/cash credit account remains satisfactory. In other words, you maintain your accounts within limits and service the interest on time. In the case of Overdraft against #shares which was aggressively marketed by Yes Bank, efforts must be made to repay bank dues and get your shares un-pledged.

3.            As a  Supplier:

           There are many small businessmen who supply various items like stationery, water bottles, food packets or many such petty items, in addition to big service providers like computers and peripherals, air conditioning accessories, etc. If you are a supplier for Yes Bank, your payments are bound to be delayed. So be prepared and plan for it. Also, look for new clientele to bridge the gap in your revenue.

4.            As an Employee: 

           As per media reports, there are assurances from SBI Chairman that employees will continue to draw their current salaries for a year.  In my view, top-level functionaries may be subjected to various investigations, for others there may not be a threat to continue unless the situation further worsens. In the circumstances, an employee should be looking for alternative job opportunities as and when available.    

5.            As an investor: 

           There are two categories of investors. One, those individual retail shareholders who have purchased shares of Yes Bank every fall and are now trapped at the bottom. The second category of investors is those who have invested in the bank's AT1 (Additional Tier 1 capital). Unfortunately, this category of investors also includes some individuals including pensioners and other senior citizens. RBI's proposed draft reconstruction plan has recommended writing down this category of perpetual bonds. A shareholder is the one who can not demand any relief or expect any solace. As SBI Chairman Rajnish Kumar,  replying to a question said there was always a risk in holding equity shares. There may be many shareholders who have purchased in the range of Rs. 350-750  with a long term view, they were a pain to see the price touching a lifetime low of Rs.5.65 on 6^th March 2020. Further,  some well-known AMCs (mutual funds) have heavily invested investors'  money in Yes Bank QIP issue from equity funds portfolio and in Bonds from Debt funds. The problem is that whether one has invested directly in the bank's shares or in bonds or through a mutual fund that has further invested in bank's paper, it is an individual retail investor who has to suffer most. Though, in the case of investment through a mutual fund, the percentage of any individual's exposure will be very little as the size of the portfolio is large. In any case, investors are the  group of stakeholders  who have to wait indefinitely for the Yes Bank to turn corner and reward them for taking a risk on the bank’s fortunes.

Contact: boirajeev@gmail.com

Mobile: 9909022489