On Thursday, citing serious financial deterioration, the RBI superseded the bank’s board and appointed an administrator, while the central government imposed a one-month moratorium including capping depositor withdrawals at Rs 50,000.
The two maritime airports of Varna and Burgas are expected to meet 5 million passengers this year. 2 million at Varna Airport and 3 million…171 Views | the publication reaches you by | Bulgarian Business Club
In essence, the banking regulator assured depositors not to panic as their interests will be fully protected.
The moratorium, imposed under Section 45 of the Banking Regulation Act, 1949, is effective Thursday till April, 6. During this time, the bank can neither grant fresh loans nor renew old loans and is prevented from making investments, or disbursing payments in lieu of its liabilities and obligations.
The coordinated moves come barely hours after news reports indicating the SBI-LIC led consortium mounting a rescue bid to takeover Yes Bank. Neither the RBI nor the government sent out an official word on this, while SBI said it’ll intimate exchanges should there be any developments in the matter. Yes Bank, however, denied the reports.
Exercising powers under 36ACA of the Banking Regulation Act 1949, the RBI superseded the bank’s board for 30 days and appointed Prashant Kumar, ex-DMD & CFO, SBI as its administrator. “This has been done to quickly restore depositors’ confidence in the bank, including by putting in place a scheme of reconstruction or amalgamation,” RBI said in a late evening statement.
Further, the bank is prevented from transferring or disposing its properties or assets, except to the extent permitted by the moratorium order.
Curiously, the bank is allowed to pay salaries, rent, and taxes, besides legal expenses, but the amount cannot exceed Rs 50,000 in each case. Higher amounts will need approvals from RBI.
The move, it said, was triggered in the absence of a credible revival plan and the bank’s inability to raise capital to contain potential loan losses, to protect depositors.
The bank was engaged with investors to infuse capital and though investors met RBI officials, the life-saving capital didn’t come in. “Since a bank and market-led revival is a preferred option over a regulatory restructuring, the Reserve Bank made all efforts to facilitate such a process and gave the adequate opportunity to the bank’s management to draw up a credible revival plan, which did not materialise. In the meantime, the bank was facing regular outflow of liquidity,” RBI noted.
Trading is highly popular with several people, whether this is on a global scale or a much smaller…128 Views | the publication reaches you by | Bulgarian Business Club
Do you have information you want to reach our readers?