On the night of Thursday, March 5th 2020, the Reserve Bank of India (RBI) took over the reins of the now much controversial Yes Bank.

When did this start?

The decline of India’s 5th largest bank started in 2018 when the RBI disallowed a longer term of Yes Bank’s chief Rana Kapoor when it came to notice that there were more bad loans than the bank had declared.

Poor governance added to the woes of the bank. Yes Bank has known to have lent to several falling institutions such as IL&FS, Anil Ambani group, CG Power, Cox & Kings, Café Coffee Day, Essel group, Essar Power, Vardaraj Cement, Radius Developers, and Mantri Group amongst others.

Who does this affect?

This fall affects all individuals and institutions that bank with Yes Bank. Total deposits run upwards of ₹2 lakh crore.

What has the RBI now done and what does it mean for you if you have an account with Yes Bank?

On 5th March, the RBI restricted withdrawals from Yes Bank to just ₹50,000 per person (even if you have multiple accounts with the bank). This amount is relaxed to ₹5 lakh in the case of an emergency or urgent requirement of money. This will be applicable until April 3rd and the RBI hopes to review this earlier.

What if I have money lying in my bank account?

As announced in the recent budget, an amount of up to ₹5 lakh is the amount you are insured for as a depositor.

What if I have invested in mutual funds that have exposure to Yes Bank?

About 32 individual schemes of mutual funds are exposed to Yes Bank debt and total exposure stands at ₹2,848 crores. If your mutual fund has exposure to Yes Bank, you should factor in a likely erosion of your funds and adjust your financial goals and adjust their saving and investment plans accordingly.

Do note, no funds that you have invested through the Basis app have an exposure to Yes Bank debt.

What lies ahead?

The RBI is evaluating a restructuring plan with names such as SBI and LIC in the play.

What do you do if you have EMIs being debited from your Yes Bank account?

Have a chat with your lender about this, whether it’s a bank or NBFC, your EMI will not stop but they might give you some flexibility in this case.

What if I have SIPs running from this account?

Several mutual fund houses have come forth and announced some comfort measures for Yes Bank customers. They will help customers to change their bank mandates speedily to ensure investors’ flow of money.

What if I want to start new investments from my Yes Bank account?

Considering there is a moratorium on all Yes Bank accounts you will not be able to make any investments (SIP or otherwise) until further notice.

In case you do have a Yes Bank account set on the Basis app and want to make a change, drop a note to support@getbasis.co and we will help you update this.