As RBI allays YES Bank depositors’ fears, crisis spreads to NBFCs, fintech players

Even as the RBI on Sunday once again assured YES Bank depositors about the safety of their funds, the crisis is impacting other banks and NBFCs. Indiabulls Housing Finance said the private sector lender owes it ₹662 crore via AT-1 Bonds. Private sector lender IndusInd Bank has decided to defer its fund-raising plans. A number of fintech players, which were using YES Bank’s platform for digital transactions, have also been impacted.

Deposits safe: RBI

“Concern has been raised in certain sections of media about the safety of deposits of certain banks. This concern is based on analysis which is flawed. Solvency of banks is internationally based on Capital to Risk Weighted Assets and not on marketcap,” the RBI said, adding that it closely monitors all the banks and hereby assures all depositors that there is no such concern of safety of their deposits in any bank.

Simultaneously, YES Bank also allowed ATM withdrawals by depositors. “You can now make withdrawals using your YES Bank Debit Card both at YES Bank and other bank ATMs,” it said in a tweet.

Net banking facilities and withdrawals from ATMs had been hit for the bank’s customers after the RBI had put the private sector lender under moratorium and capped withdrawals at ₹50,000 per customer on March 5. YES Bank is also set to announce its long-delayed third-quarter results on March 14.

“…we wish to inform that the Administrator will consider and take on record the unaudited financial results of the bank, for the quarter and nine months ended on December 31, 2019 along with limited review report thereon by the Statutory Auditors of the Bank on Saturday, March 14, 2020,” it said in a regulatory filing.

Despite all this, the crisis did impact sentiment in the financial services sector.

Indiabulls Housing Finance said the private sector lender owes it ₹662 crore via AT-1 Bonds. “The investments in AT-1 bonds of YES Bank were made in 2017 as part of its treasury management of over ₹20,000 crore of cash and when the bank was worth over $10 billion in value. Indiabulls Housing Finance has no term loans outstanding from YES Bank,” it said in a regulatory filing on Sunday.

Neither Sameer Gehlaut, promoter of Indiabulls Housing Finance, nor any of his companies/companies owned by his family members have loans outstanding from YES Bank, it further said.

IndusInd puts off fund-raise

Private sector lender IndusInd Bank has decided to defer its fund-raising plans. “In view of the current market conditions and since the bank is adequately capitalised at present, it has been decided not to consider raising Basel III-compliant Debt Capital instruments for the time being,” it said in a regulatory filing, adding that the board meeting called on Monday is now deferred.