Finance minister Nirmala Sitharaman on Friday assured cash-starved Yes Bank depositors that their money is safe and the RBI is working on an early resolution of the issue.

“I'm in continuous interaction with the Reserve Bank of India (RBI). The central bank is fully seized of the matter and has assured they will give a quick resolution. I want to assure every depositor that their money shall be safe,” Sitharaman told reporters in New Delhi.

She said the steps taken are in the interest of depositors, banks and the economy.

“The RBI governor has assured me that there will be no loss to any depositor,” she added.

A day earlier, the Reserve Bank of India superseded the board of directors of the bank after determining that there had been a serious deterioration in its financial position even as the government slapped a moratorium capping withdrawals from all current, savings and deposit accounts held at the bank’s branches at Rs 50,000 till April 3.

The RBI named Prashant Kumar, former deputy managing director and chief financial officer of State Bank of India, as the administrator of the bank.

The banking regulator said the decision had been taken in consultation with the government.

“This has been done to quickly restore depositors’ confidence in the bank, including putting in place a scheme for reconstruction or amalgamation,” the RBI note said.

The bank now 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 regulatory actions, undertaken by the RBI and the government, came hours after finance ministry sources confirmed that SBI was directed to bail out the troubled lender.

Sitharaman has insisted the immediate priority to ensure Yes Bank customers are able to withdraw money within Rs 50,000 limit.

Yes Bank 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.

Depositors rush to ATMs, unable to withdraw cash

Harried Yes Bank depositors rushed to ATMs to withdraw cash but faced a multitude of problems including closed down machines and long queues, after the RBI placed the bank under a moratorium, capping maximum withdrawals at Rs 50,000 per account for a month.

Aggravating the problems of depositors were difficulties accessing the internet banking channel, which ensured that they can't transfer the funds online as well.

Account holders stand in a queue to withdraw money from Yes Bank at Vashi in Navi Mumbai, Friday, March 6, 2020 PTI

At an ATM in south Mumbai's Horniman Circle, with the RBI headquarters overlooking it, the shutters were pulled down.

The guard on duty said the machine was non-operational before he reported to work late in the evening and he was ordered to shut it after 10pm.

In the residential area of suburban Chembur, one ATM was dispensing cash but had a long queue of anxious depositors.

One man said it was still possible to withdraw up to Rs 50,000 in multiple transactions from the machine.

However, another machine nearby had run dry within minutes of the RBI announcement, a woman said.

Yes Bank shares plunge 85%

Shares of Yes Bank came under massive selling pressure as the session progressed on Friday and plunged nearly 85 per cent after the cash-strapped lender was placed under the 30-day moratorium.

On the BSE, the scrip sank 84.93 per cent to Rs 5.55-- its 52-week low -- as investors deserted the counter.

It plummeted 84.64 per cent to Rs 5.65 -- its one year low -- on the NSE.

The company's market valuation also dropped Rs 5,432.02 crore to Rs 3,927.73 crore on the BSE.

The entire banking pack also came crashing, with RBL Bank trading 13 per cent lower, followed by IndusInd Bank which dropped 7 per cent, SBI 6.5 per cent and Axis Bank 3.55 per cent on the BSE.

The BSE bankex was trading lower by nearly 3 per cent in afternoon trade.

The broader market was also hit hard, with the BSE benchmark Sensex tanking over 1,000 points.

'The Yes Bank fiasco has come as an out-of-syllabus question for the market amid ongoing worries of coronavirus,' said Santosh Meenas, senior analyst, TradingBells.

The market took this event very negatively because it raises a question on the stability of the overall Indian financial system, he said, adding that the market is facing a double-whammy situation where the global markets are struggling on the back of coronavirus worries and Yes Bank fiasco is a setback event on the domestic level.

SBI board gives 'in-principle' approval for investment in Yes Bank

The SBI board has given the largest lender an 'in-principle' approval to invest in the capital-starved Yes Bank.

The central board of SBI discussed the matter at a meeting on Thursday, it informed the exchanges.

'The matter in regard to Yes Bank was discussed at the meeting of the central board of bank on Thursday and an in-principle approval has been given by the board to explore investment opportunities in the bank,' the SBI board informed the bourses late in the evening.

According to reports, the government has asked SBI and life insurance behemoth LIC to collectively pick up a 49 per cent stake in Yes Bank.

Congress takes jibe at Centre

'No Yes Bank,' Congress leader Rahul Gandhi has said, taking a dig at the BJP-led government over the moratorium placed on Yes Bank, and alleged that Prime Minister Narendra Modi and his 'ideas' had destroyed the country's economy.

'No Yes Bank. Modi and his ideas have destroyed India's economy,' the former Congress chief said in a tweet.

Senior Congress leader P. Chidambaram also hit out at the government, saying its 'ability to govern and regulate financial institutions stands exposed'.

'BJP has been in power for six years. Their ability to govern and regulate financial institutions stands exposed. First, it was PMC Bank. Now it is YES Bank. Is the government concerned at all? Can it shirk its responsibility? Is there a third bank in the line?' the former finance minister said in a tweet.