Mumbai, Mar 6: Following the 30-day moratorium placed on Yes Bank, asset management companies have asked their clients, who have bank accounts with the troubled lender, to furnish details of alternate accounts for receiving redemption payouts.
Redemption is the return of an investor’s principal on a fixed income security such as a bond, mutual fund or preferred stock.
The Reserve Bank’s action came after the Rana Kapoor-promoted bank failed to raise capital to address potential loan losses.
According to a government gazette, the bank’s depositors are allowed to withdraw cash up to Rs 50,000 from their accounts during the moratorium period.
The withdrawal limit, however, can be relaxed in case of medical emergencies, higher education and for expenses related to marriages, it said.
“If clients want to change their redemption bank account mandate from Yes Bank to any other bank they can send a request… We shall process the request for tomorrow’s redemptions so that their money isn’t blocked,” Kotak Mahindra Asset Management’s managing director, Nilesh Shah, said in a late night tweet on Thursday.
Edelweiss Asset Management also said it will ensure redemption payouts are not made to Yes Bank accounts from Friday onwards and asked its clients to give an alternate account.
“We request investors who have redemption payouts pending to contact us… Advisors who have brokerage payouts pending should also contact us to change to alternative bank accounts,” Edelweiss MF’s chief executive officer Radhika Gupta tweeted.
Stock market brokerage firm Zerodha has also cancelled withdrawal requests made to Yes Bank.
The company’s founder and CEO, Nitin Kamath said in a tweet, “We have cancelled all fund withdrawal requests made by clients to their Yes bank accounts so that the money doesn’t get blocked. Please change, if your primary account is Yes Bank, to any other and withdrawal the funds.”
In a statement, RBI said in the absence of a credible revival plan, and in public interest and the interest of Yes Bank’s depositors, it had no alternative but to apply to the government for imposing a 30-day moratorium effective March 5. It also appointed State Bank of India’s ex-deputy managing director and chief financial officer, Prashant Kumar as the administrator of the bank.
Late Thursday night, State Bank of India informed exchanges that its board has given an in-principle approval to explore investment opportunity in Yes Bank. (PTI)
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