Yes Bank shares tumble 25% as RBI takes control of private lender

New Delhi: Yes Bank shares on Friday (March 6) tanked 25 per cent at Rs 27.60 after the central bank took control of the private lender and capped withdrawals at Rs 50,000 per account till further orders. The RBI on late Thursday took this decision because of a serious deterioration in the bank's financial position.

Shares of India`s fifth-largest private sector lender tumbled to their lowest in over a decade on Friday. The Reserve Bank of India (RBI) on Thursday placed Yes Bank under a moratorium.

Shares of SBI tumbled 12 per cent today in their biggest intraday drop since October 2012.

Moody`s report said the moratorium was credit negative as it affects timely repayment of depositors and creditors, adding that the lack of coordinated, timely action on the lender highlights continued uncertainty over bank resolutions in India.

State Bank of India, however, on late Thursday said that its board had given its in-principle nod to explore an investment in Yes Bank.

The RBI statement on Thursday said, "The financial position of Yes Bank Ltd. (the bank) has undergone a steady decline largely due to the inability of the bank to raise capital to address potential loan losses and resultant downgrades, triggering invocation of bond covenants by investors, and withdrawal of deposits." 

The statement further said, "The bank has also experienced serious governance issues and practices in recent years which have led to a steady decline of the bank. The Reserve Bank has been in constant engagement with the bank`s management to find ways to strengthen its balance sheet and liquidity." 

(With Agency Inputs)