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India: Yes Bank Moratorium, 2020

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Abstract

By December 2019, Yes Bank's capital levels had dropped below the Reserve Bank of India's (RBI) mandated threshold, as the bank was facing a combination of deposit withdrawals, losses from extraordinary credit provisions, and overexposure to stressed sectors. On March 5, 2020, India's Ministry of Finance (MoF) and the RBI placed Yes Bank under a 30-day moratorium that restricted most banking functions and limited deposit withdrawals to INR 50,000 per person (USD 663). The purpose of this moratorium was to allow the RBI time to design a plan of reconstruction or amalgamation for Yes Bank to allow depositors limited access to their funds and to secure the management. The moratorium and related restrictions were terminated prematurely on March 18, 2020, after the MoF approved a restructuring plan recommended by the RBI. Yes Bank received an ad hoc capital injection of INR 100 billion from the government-owned State Bank of India (SBI) and a consortium of private banks, and the RBI provided an emergency liquidity facility of INR 600 billion as a part of the restructuring. Depositors did not experience losses. By June 2023, Yes Bank's deposit base had rebounded to INR 2.2 trillion, compared with INR 1.1 trillion in March 2020.

Suggested Citation

  • Gupta, Salil, 2025. "India: Yes Bank Moratorium, 2020," Journal of Financial Crises, Yale Program on Financial Stability (YPFS), vol. 7(2), pages 157-190, April.
    • Handle: RePEc:ysm:ypfsfc:v:7:y:2025:i:2:p:157-190
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    File URL: https://elischolar.library.yale.edu/cgi/viewcontent.cgi?article=1653&context=journal-of-financial-crises
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    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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