After Yes Bank was placed under moratorium, digital payments were impacted as PhonePe, which depends on the cash-strapped lender for its transactions, could not operate.
The Reserve Bank of India's moratorium and withdrawal cap on Yes Bank is credit negative, and the lack of coordinated action action highlights continued uncertainty around bank resolutions, Moody's Investors Service said on Friday.
The central bank on Thursday imposed a moratorium on the capital-starved Yes Bank, capping withdrawals at Rs 50,000 per account and superseded the board of the private sector lender with immediate effect.
“RBI's moratorium on Yes Bank is credit negative as it affects timely repayment of bank depositors and creditors,” Moody's Investors Service Vice President – Senior Credit Officer, Financial Institutions, Alka Anbarasu said.
It can be noted that the bank's own net banking facilities have not been operational since Thursday evening. Other fintech operators who rely on Yes Bank to settle their transactions are also down.
“We sincerely regret the long outage. Our partner bank (Yes Bank) was placed under moratorium by RBI. Entire team's been working all night to get services back up asap (as soon as possible),” the app's chief executive Sameer Nigam tweeted early in the morning.
PhonePe, one of the country's largest digital payment platforms, is dependent on Yes Bank to process its transactions.
He added that the app hopes to be live in a “few hours”.
Yes Bank placed under a moratorium Thursday evening, with the RBI capping deposit withdrawals at Rs 50,000 per account for a month and superseding its board.
Yes Bank will not be able to grant or renew any loan or advance, make any investment, incur any liability or agree to disburse any payment.
The bank will not be able to grant or renew any loan or advance, make any investment, incur any liability or agree to disburse any payment.
For the next month, Yes Bank will be led by the RBI-appointed administrator Prashant Kumar, an ex-chief financial officer of State Bank of India (SBI). He added that the PhonePe app - one of the most popular interfaces for UPI transactions - hopes to be live in a “few hours”.
Moody's said it expects Indian authorities will take steps to prevent the weakness in the bank's viability from significantly impacting its depositors and senior creditors.
“The lack of a coordinated and timely action highlights continued uncertainty around bank resolutions in India,” Anbarasu added.
The board of SBI on Thursday gave an “in-principle” approval to invest in the capital-starved Yes Bank, which has been struggling to execute a capital raising plan for the last six months.
Its core equity tier-I ratio had slipped to 8.7 per cent as of September.
The bank had also delayed its December quarter results.
The last lender to be placed under a similar action was PMC Bank in September last year. While the withdrawal limits have been increased over time to Rs 1 lakh now, many PMC Bank