India’s Yes Bank debacle jolts investors, customers and partners
Shares in India’s Yes Bank (YESB.NS) plunged on Friday as panicky depositors rushed to withdraw funds and payment partners faced outages after the banking regulator took control of the lender in a late-night move and limited withdrawals.
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 concerns over governance.
As thousands of customers poured into overcrowded branches nationwide and scrambled to pull funds, tempers flared and police were deployed in some states to control crowds.
Many business owners feared the central bank’s move would sting 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.
Customers took to social media to vent about the lender’s online systems being down, preventing fund transfers. And payment apps, such as PhonePe, which use Yes Bank to process transactions, also faced extended outages.
In a tweet, Sameer Nigam, the head of PhonePe, which is now owned by Walmart Inc’s (WMT.N) Indian arm Flipkart, apologised to customers and said it hoped to go live again in a few hours.