Updated: March 16, 2020 8:22:32 pm
Reserve Bank of India (RBI) Governor Shaktikanta Das said Monday that the moratorium on Yes Bank will be lifted on March 18 (Wednesday) at 6 pm and that there is a robust revival plan for the lender.
The central bank had put the struggling private sector lender under moratorium earlier this month and had capped withdrawals at Rs 50,000 for all accounts, citing the “financial position” of the bank “which has undergone a steady decline”.
The central bank governor said that swift action has been taken by the government and central bank to resolve the Yes Bank crisis and said that depositors’ funds in the bank are fully safe and secured. Das said there was no reason to worry.
The RBI governor also announced that the identity of the bank would be retained as a private sector entity and that Yes Bank is under a robust revival plan. A new board will assume its position at Yes Bank and the office of the administrator will cease to exist on March 26, he said.
Das also stressed that the health of banks, including that of the small private-sector lenders, is good. The RBI Governor, while hinting at a rate cut, stopped short of a decision, belying market expectations.
To a question why the rates were left unchanged at 5.15 per cent, Das said, “According to the prevailing law, the rate cut call has to be taken through the monetary policy committee, but I don’t rule out anything. Depending on the evolving situation, we will decide on the timing of our action.”
Impact of coronavirus
Speaking about coronavirus and its impact on the Indian financial markets and economy, Das said India is not immune to this pandemic, as over 100 cases have already been reported so far. The RBI governor further said coronavirus (COVID-19) is expected to impact domestic as well as global growth.
However, he did not announce any rate cut in today’s press conference and said that only the central bank’s monetary policy committee (MPC) will take a decision on the issue in its upcoming meeting.
The market was expecting a possible rate cut as Monday’s press conference was called only around noon after as many as 43 other central banks – including the US Federal Reserve, European Central Bank and Bank of England – cut interest rates.
However, Das did not rule out a rate cut at the next MPC meeting on April 3 and said that all options will be considered.
Das announced that the RBI will be conducting another $2 billion swap on March 23. He said that the central bank has several policy instruments and stands ready to mitigate the impact of the coronavirus pandemic.
The governor of the central bank also said that the RBI will launch another round of long-term repo operations worth Rs 1 lakh crore in June.
(with inputs from PTI)
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