India’s Yes Bank plunges 60%, panicked depositors rush to withdraw funds

BENGALURU/MUMBAI/NEW DELHI: Shares in India’s Yes Bank Ltd plunged 60% on Friday as panicky depositors rushed to withdraw funds after the central bank took control in a dramatic late-night move and limited withdrawals from the troubled lender.

The shock move by the Reserve Bank of India (RBI) followed months of steady deterioration in the financial position of the country’s fifth-largest private lender and growing concerns over governance.

Shares of Yes Bank plunged as much as 85% to wipe out more than $1 billion of market value, marking the biggest intra-day fall in an Indian blue-chip stock. By early afternoon, the stock was down 60% after paring losses.

As thousands of customers rushed to pull out funds and tempers flared at overcrowded branches nationwide, police deployed in some states to help control the crowds.

Many business owners feared the central bank’s move would hit their operations too, as the lender, with 1,000 branches across India, has many commercial clients.

“I will struggle to pay salaries to my staff, or pay any of my vendors, because of the restrictions,” said Chintan Patel, a building contractor in the western city of Ahmedabad.

Many customers took to social media to complain that the bank’s online system was down, preventing fund transfers, while payment apps, such as PhonePe, which use Yes Bank to help process transactions, were also affected.

“Effectively, Yes Bank should have no equity value left,” said Sandip Sabharwal, a Mumbai-based fund manager. “Ideally, trading should be suspended till formal restructuring is announced.”

The rout of Yes Bank sent the broader market and the banking index into a tailspin. Reuters

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