On March 5, 2020, the Reserve Bank of India (RBI) seized Yes Bank, India’s fourth largest private bank. RBI replaced Yes Bank’s board and set caps to withdrawals. The move was made after Yes Bank’s worsening financial health and worries over mismanagement. After the announcement, stocks fell 60%, and depositors rushed to withdraw funds. Amidst the chaos, local police have been stationed outside bank branches and ATMs to prevent further issues.
There are also continued worries by investors and analysts that this could be a sign of further volatility in India’s financial system, despite the RBI’s assertion that they will act quickly to stabilize Yes Bank. Previously lauded as India’s fastest growing bank in 2011, Yes Bank has recently been troubled by a weakening balance sheet and serious liquidity issues, despite attempts to improve its health such as an announcement to raise USD $2 billion in late 2019.
