Yes Bank Moratorium Live Updates: Inward Payment Using NEFT And IMPS Restored

Yes Bank founder Rana Kapoor, arrested under money laundering charges, was remanded in the Enforcement Directorate's custody till March 11 by a Mumbai court on Sunday. Kapoor, 62, was arrested by the ED under provisions of the Prevention of Money Laundering Act (PMLA) here around 3 am on Sunday as he was allegedly not cooperating in the probe, officials earlier said.
The ED produced Kapoor before a holiday court which remanded him in the probe agency's custody till March 11.

Yes Bank has restored inward IMPS and NEFT transactions allowing depositors to pay credit card dues and loan obligations from other bank accounts.

The moratorium on Yes bank Ltd. could be lifted as early as this Saturday, according to Reserve Bank of India-appointed administrator Prashant Kumar.

“All of us are working towards lifting of moratorium much before the last date that is April 3, and it could be as early as this Saturday,” Kumar told BloombergQuint in an interview.

Kumar assured Yes Bank’s customers that their deposits are “absolutely safe”, and that they can withdraw up to Rs 50,000 this month, as per the RBI-imposed cap. He doesn’t foresee any issue on the liquidity front, with added “lines of comfort” from both RBI and the State Bank of India, if required.

Reserve Bank of India in a tweet reassured all depositors that their deposits are safe in any bank. The reassurance comes after the regulator and the finance ministry had to rescue Yes Bank.

Rana Kapoor, founder of Yes Bank, had been arrested by the Enforcement Directorate on charges of money laundering, Press Trust of India reported on Sunday morning. Kapoor had been questioned by the agency on Saturday.

Over the weekend, the lender published a list of FAQs to help customers understand the impact of the moratorium on services. The FAQs are recreated below.

Q. Can I withdraw money from my account?

A. During the moratorium period, the customers can use ATMs and Branches to withdraw a total of Rs 50,000 from their accounts which they are holding in the same capacity and same right.

Q. Are the YES BANK ATMs functioning?

A. Yes, ATMs are functional. Click here to locate the ATM near you.

Q. Can I use my YES BANK Debit Card at other bank ATMs?

A. You can now make withdrawals using your YES BANK Debit Card both at YES BANK and other bank ATMs to make withdrawals up to a total of Rs 50,000 from your accounts which you hold in the same capacity and same right.

Q. Is the prescribed limit of Rs 50,000 per day limit or an aggregate limit in the entire moratorium period?

A. The prescribed limit of Rs 50,000 is an aggregate limit for the entire moratorium period i.e. w.e.f. 6:00 pm on March 5 2020 till April 3rd 2020. The customers will be allowed to withdraw a total of Rs 50,000 (through all channels and across all products) from their accounts which they are holding in the same capacity and same right.

Q. If I have one account in the name of A and another in the name of A and B (joint account holders’), will I be allowed to withdraw Rs 50,000 each from these two accounts?

A. You will be allowed to withdraw a total of Rs 50,000 from both the accounts put together as you are holding these accounts in the same capacity and same right.

Q. Is the Rs 50,000 limit at Customer ID level or at account level?

A. The prescribed limit of Rs 50,000 is at Customer ID level (same capacity and same right).

Q. Can I get DD issued from my account? Will the amount of DD be included in my overall withdrawal limit of Rs 50,000?

A. Yes Bank clearing is currently suspended & DD/Cheque will not get presented in clearing by other Banks till further instructions or till reinstatement of clearing activities.

Q. Am I allowed to do RTGS/NEFT transactions from my account?

A. Online remittances including RTGS/NEFT are suspended as of now

Q. I have EMIs linked to my account. Will those be honoured?

A. All clearing activities are suspended as of now. Your EMIs will be honored up to the prescribed limit subject to reinstatement of clearing activities.

Q. What will happen to the cheques that I have written and issued to my clients?

A. All clearing activities are suspended as of now as per the directive. Your cheques already issued will not be honored till the clearing activities are restarted or further directive from regulator.

Q. I have deposited a cheque in my account at Yes Bank counter/drop box. Will that transaction go through?

A. All clearing activities are suspended currently. Yes Bank DD/cheques will not be presented in clearing till further instructions or till reinstatement of clearing activities.

Q. Am I allowed to raise a stop payment request?

A. Yes. You will be able to stop a payment which has already been initiated.

Q. Am I allowed to operate/access locker facilities?

A. Yes, you will be allowed to access your locker during this time period.

After two days of disruption, Yes Bank Ltd informed it’s customers late on Saturday night that it’s ATMs and debit cards are now functional.

An official familiar with the matter had told BloombergQuint on Friday that Yes Bank was working to reconfigure systems to ensure that the Rs 50,000 withdrawal limit is honoured.

A spokesperson for PhonePe told BloombergQuint that since Saturday morning around 15 million of its users have begun using the application now that full services are restored.

Between Friday morning and Saturday, each service was brought back online one-by-one. Beginning on Friday evening, person-to-person transactions services on the wallet as well as on debit and credit cards were restored following which, by midnight UPI transactions were also enabled.

ICICI Bank is the new banking partner and customers can continue using their existing @ybl handle and they don’t need to change anything. Payments on external websites can also be done through PhonePes’ wallet and UPI facility, the spokesperson said.

Further, merchants using PhonePe can start accepting payments online as well as offline through QR codes.

PhonePe restored BHIM UPI facilities late Friday night, after the Reserve Bank of India and the National Payments Corporation of India allowed the company to continue using the @ybl handle for UPI transactions, said a person with direct knowledge of the development.

The @ybl handle is tied to Yes Bank and its underlying infrastructure, which became inactive once the moratorium kicked in, on Thursday night.

The regulators effectively have allowed PhonePe’s users to continue using their existing UPI IDs or virtual payment address, ending with @ybl, while ICICI Bank acts as the anchor bank, the person quoted above said.

Had the regulator not granted the company permission to quickly remedy these issues, PhonePe would have to seek the consent of all their customers to create new VPAs linked to ICICI Bank.

PhonePe so far only had one anchor bank, Yes Bank, providing the underlying infrastructure for processing UPI and other digital payments. Every UPI ID/VPA is tied to a specific bank that provides the underlying bank infrastructure to the payment company.

While Paytm has Paytm Payments Bank as the anchor, Google Pay has four anchor banks.

Three mutual fund houses UTI MF, Nippon India MF and PGIM India MF on Friday decided to side-pocket their exposures to Yes Bank bonds following the rating downgrade of troubled private lender's debt instruments.

This is subject to approval from the board of trustees of respective fund houses.

The move will prevent the distressed assets from damaging the returns generated from more liquid and better-performing assets.

The development comes following the downgrade of debt instruments of Yes Bank to 'D', which is below investment grade, by rating agency ICRA Ltd.

In a statement, UTI MF said it has proposed to create a segregated portfolio in respect of debt securities of Yes Bank in its two schemes — UTI Credit Risk Fund and UTI Medium Term Fund — effective from Friday, subject to approval from the Board of Trustees.

Nippon India MF has also proposed to create segregated portfolio of securities of Yes Bank held in the schemes with effect from Friday.

The Enforcement Directorate has raided Yes Bank Director Rana Kapoor’s Mumbai residence, officials told PTI.

The officials said the raid is being carried out at Kapoor’s Samudra Mahal residence in the western metropolis. The action is being conducted under the Prevention of Money Laundering Act and is aimed at collecting more evidence.

The central agency is probing Kapoor’s role in connection with the disbursal of a loan to a corporate entity and the subsequent alleged kickbacks that were reportedly received in his wife’s accounts.

Some other alleged irregularities are also under the agency’s scanner, they added.

Moody's Investors Service has downgraded Yes Bank's rating following the Reserve Bank of India imposing a 30-day moratorium that prevents the lender from making payment to its creditors.

"The ratings remain under review, with the direction uncertain," the ratings agency said, downgrading Yes Bank’s long-term foreign-currency issuer rating to Caa3 from B2. Moody's has also downgraded the bank's long-term foreign and local currency bank deposit ratings.

ICRA Ltd. too downgraded Yes Bank ratings to D. About Rs 52,611.70 crore-worth of bonds of bonds were downgraded.

SBI will acquire a 49 percent stake in the private lender at not less than Rs 2,450 crore, according to a draft rescue plan proposed by RBI after seizing control of the struggling private lender citing its poor financial position.

PhonePe has restored its payments mechanism for transactions made using debit and credit cards and through its wallet on its mobile app. The system had faced disruptions earlier in the day due to Yes Bank being put under a moratorium.

Paytm Payments Bank has restricted transaction settlements, including those made using Unified Payments Interface, into Yes Bank accounts to safeguard their users’ money.

“Though many third-party apps that rely on Yes Bank have also been affected, the UPI ecosystem has been designed in a way where customers can continue using other UPI apps to transact on UPI," it said in a statement on Friday.

After Finance Minister Nirmala Sitharaman’s press conference on the Yes Bank crisis, the private lender’s RBI-appointed administrator Prashant Kumar said solutions are being worked upon for revival “well before" the moratorium period of 30 days ends.

Kumar, a former chief financial officer of State Bank of India, also assured depositors that their money is safe and there is no reason to panic.

"The current moratorium has been brought into effect keeping the depositors' interest in mind and towards restoring their confidence. A solution is being worked upon to revive the Bank well before the moratorium period of thirty days ends," Kumar said in a statement issued by Yes Bank.

The Reserve Bank of India said State Bank of India will pick up 49 percent stake in Yes Bank under the reconstruction plan by acquiring shares of face value Rs 2 each at a premium of Rs 8 apiece.

More key highlights of the draft reconstruction plan:

• Investor bank to have two directors on reconstructed Yes Bank.
• RBI seeks to dissolve current board of directors and appoint new board.
• RBI seeks to appoint new MD and CEO of Yes Bank.
• All employees of the bank to continue working at Yes Bank.
• Offices and branches of Yes Bank to continue as before.
• Reconstituted bank shall have the right to shut old branches or open new ones.

The Reserve Bank of India has announced a scheme of reconstruction for Yes Bank.

Key highlights of the draft reconstruction plan:

• Yes Bank’s authorised capital to be Rs 5,000 crore.
• Yes Bank’s equity shares to be worth Rs 4,800 crore.
• Draft plan seeks to write down AT-1 bonds permanently.
• Investor bank to invest up to 49 percent in Yes Bank.
• Investor bank to not reduce holding below 26 percent before three years.
• Investor bank to hold 49 percent in Yes Bank after infusion.
• Investor bank to pay at least Rs 10 per share for Yes Bank equity.

Yes Bank is reworking systems to meet the Rs 50,000 withdrawal limit, said a senior official familiar with the matter. He explained that once this is done, credit cards, debit cards and ATM systems can be brought back online.

The following is the latest update as of 4:00 p.m. on Friday:

• Credit cards, debit cards and ATMs of Yes Bank remain offline.
• Bank working to rework IT systems to cap transfers, withdrawals at Rs 50,000. Once that is done, credit cards, debit cards and ATM withdrawals to that cumulative amount will restart.
• Branch staff, IT staff have to be briefed on how to operate during the moratorium period.
• Fintech, payment firms using Yes Bank systems can move to other banks. Up to Rs 50,000 they can try and process through Yes Bank.
• Borrowers with credit lines, working capital lines will not be able to draw down any further. They can only draw down existing balances upto Rs 50,000.

Security at Yes Bank headquarters, its branches and ATMs across Mumbai was tightened to avert any untoward incident, as hundreds of account holders of the crisis-hit private lender rushed to withdraw money, an official said on Friday.

Account holders rushed to branches of the bank and their ATMs to withdraw money on Friday morning, leading to chaos at many centres, including the one in south Mumbai's Fort area.

"We have deployed police personnel outside the bank headquarters, its branch offices and ATM centres in the city to avert any kind of law and order issue," a spokesperson of the Mumbai Police said.

Source: PTI

According to two executives from the ATM industry, the RBI has informed the bank to shut its ATMs and that cash has to be disbursed to customers only through the branches.

Since the NPCI has taken the banks’ ATMs offline and bank customers can’t withdraw cash from other ATMs, there is no need to replenish the ATMs immediately, unless this is reversed, they said.

Several companies use Yes Banks’ application programme interface for connecting with the Unified Payments Interface platform. The APIs interlink the third-party companies’ payment page on the mobile application or website with Yes Banks’ back-end system that connected to the UPI payments platform.

Around 21 of the 38 live third-party application providers are using bank APIs provided by Yes Bank for UPI payments, according to the NPCI’s website. These include from Swiggy, Hungrybox, MakeMyTrip, Udaan, PVR Cinemas, Myntra, Flipkart, Airtel to financial firms like PhonePe and Angelbroking, to name a few. Other companies that could be affected by the moratorium include BharatPe, POS players like Paynearby and neo-bank Niyo, amongst others.

BloombergQuint has reached out to the companies named above for comments on whether they are facing issues with processing UPI payments and other payments and when services would be restored. Their comments are awaited.

BharatPe has said that it will be replacing existing QR codes, that were tied to Yes Bank’s network till date but are now inactive, with QR Codes powered by ICICI bank within the next two days.

A senior executive with a cash management company’s said that ATMs were operational till early morning, after which it seems NPCI and or the bank decided to take them offline. It is likely that they were not able to enforce the Rs 50,000 limit as there was overlap between the branch withdrawal and ATMs.

The government and the RBI are working together to resolve the issue, Finance Minister Nirmala Sitharaman said in the parliament today.

Senior official at NPCI, speaking on conditions of anonymity, says that Yes Bank's point of sale terminals, debit cards and credit cards have been disconnected as of now.

The NPCI is currently working on a resolution process and should be able to sort the situation out, soon, he added.

Radhika Gupta, Edelweiss AMC

• If you have an SIP for Rs 60,000, that will fail beyond Rs 50,000.
• My recommendation is they now change their auto debit mandate for SIPs when they need to. If they have smaller SIPs, they will go through as long as you have sufficient balance in your account.
• At one level, money is coming out of your account, but at some point SIPs will fail because of the Rs 50,000 limit.
• As AMCs we have to be proactive and reach out to those who have linked Yes Bank accounts in some form to encourage them to change their bank account quickly.
• If someone wants redemption, they need to call us, we will facilitate a change in bank account.
• If you have a second bank account, give us the details, we will do it as quickly as possible.

Vijai Mantri, JRL Money

• People are concerned if we will see more Yes Bank kind of situations in mutual fund schemes.
• Though our exposure to Yes Bank has become zero, we see a further downside to these funds.
• It is very prudent now that people have at least two bank accounts and at least one of them be a large public sector lender.

RBI Governor tried to assure Yes Bank’s account holders today, saying that swift action will be taken to revive the private lender. The central bank had allowed the last few months for the bank’s management to try “various avenues”. However, once it was evident that “Yes Bank wasn't able to find a resolution, we intervened,” Das said at the sidelines of an event in Mumbai.

Mutual funds are allowing customers to change their redemption account since money would get locked in if it is redeemed to Yes Bank.

Yes Bank, being a large private bank has a number of inter-linkages with the payment system. Payment gateway RazorPay, in an update on their Twitter page, said that some services are down.

PhonePe who’s UPI platform uses Yes Bank system, has also faced problems intermittently.

A day after the Reserve Bank of India placed Yes Bank Ltd. under moratorium and restricted deposit withdrawals to Rs 50,000, barring special circumstances, depositors are seen at branches trying to understand their options.

BloombergQuint visited three branches of Yes Bank early morning on Friday and managed to speak to more than 10 depositors, most of whom requested anonymity.

While a few depositors walked in to withdraw money from the ATMs from 7 a.m. onward they could not withdraw cash as the ATMs were not stocked. Depositors began lining up outside the branch only up at around 9:30 a.m., when the branch was officially opened.

One person said that they had to request their office to permit them one day’s leave in order to withdraw the full Rs 50,000 from their account for their expenses in the coming week, because they did not know how long it would take at the branch.

One depositor, at the Worli branch, said that they were very happy with the services the bank had provided them over the last few years. But since the imposition of the moratorium on March 5 there has been no communication from the bank via text message or emails, which is disappointing, they said. This person added that though they have another bank account with a public sector bank, the fact that net banking services have been inaccessible since Thursday night is concerning.

While the rules of the moratorium allow depositors to withdraw up to Rs 5 lakh in exceptional cases, two depositors said they have to make large payments in the coming week that do not fall under these categories. This include investments and real estate related transaction, they said, adding that even if they were to file a request there is no certainty on whether it would be approved by the bank and the RBI and in time.

BloombergQuint managed to speak to two branch staff who said that they neither have received any formal communication from their seniors nor from the bank’s management on the way forward and whether the ATMs would be replenished during the day (March 6)  or over the weekend.