SBKJY State Bank Of India (PK)

By Mike Bird and P.R. Venkat 

India's banking regulator seized control of a struggling commercial bank, the first time in more than a decade that the government has stepped in to backstop a private lender.

The Reserve Bank of India, the nation's central bank, said Thursday evening that it had superseded the board of directors of Yes Bank Ltd., prompted by a "serious deterioration" in Yes Bank's financial position.

The RBI said it will be in charge of the Mumbai-headquartered bank for 30 days, during which withdrawals will be limited to 50,000 rupees ($676.20), and the bank's lending and investment activities will be curtailed.

"This has been done to quickly restore depositors' confidence in the bank," the RBI said in a statement. It added that a plan is being put in place to restructure Yes Bank, and a former senior executive at the State Bank of India--the country's largest state-owned lender--has been appointed as administrator.

Shares of Yes Bank plunged 50% on Friday morning on India's National Stock Exchange, giving the lender a market capitalization of about $640 million. The broader stock market was down about 3%, while a bank-sector index fell 4.5%.

Serena Ng contributed to this article.

(END) Dow Jones Newswires

March 06, 2020 01:17 ET (06:17 GMT)

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