A man walks towards a Yes Bank ATM in Old Delhi, India. Photo: Nasir Kachroo / NurPhoto

Troubled private lender Yes Bank, which last week got a lifeline from the government, said it will fully resume operations from Wednesday. In a Twitter post, the bank said customers will be able to access all its digital services from 6 pm on Wednesday and that its 1,132 branches across the country will be open the next day.

Earlier this month, the country’s central bank placed Yes Bank under a moratorium until April 3, following deterioration of the bank’s financial position, and took control of its board. On March 5, the Reserve Bank of India (RBI) limited withdrawals from Yes Bank accounts to 50,000 rupees (US$ 675) a month with few exceptions.

The announcement of a moratorium had caused panic among Yes Bank customers and triggered a scramble to withdraw money. But they were unable to access internet banking, make digital payments and withdraw money from teller machines.

On Friday, the Union Cabinet approved a reconstruction scheme for Yes Bank, as proposed by the RBI. As per the plan, a consortium of lenders led by the country’s largest bank, State Bank of India, will pick up a 49% stake in Yes Bank. The consortium will include several banks and financial institutions – such as ICICI Bank, Axis Bank and mortgage lender Housing Development Finance Corporation – and will invest around 100 billion rupees.

Reserve Bank Governor Shaktikanta Das on Monday tried to allay the fears of depositors and said the plan to restructure Yes Bank was sustainable. He said the depositors’ money was absolutely safe and that they should not withdraw in a panic. The bank has already lost 720 billion rupees (US$ 9.73 billion) worth of deposits in the past six months.

As per the revival plan, Yes Bank got its largest funds infusion from State Bank of India (60 billion rupees), followed by ICICI Bank and HDFC (10 billion rupees each). This is the first time both the government and the Reserve Bank of India have brought together strongly capitalized public and private sector lenders to bail out a stressed private bank.

Yes Bank co-founder Rana Kapoor was last year told to step down after the central bank found that the private lender had understated its bad loans for two consecutive years. Earlier this month he was arrested for alleged money laundering.

The country’s corruption watchdog, Enforcement Directorate, has alleged that Kapoor had bought 37 billion rupees (US$500 million) worth of debentures of troubled shadow banker Dewan Housing and Finance Ltd, which later became bankrupt. As kickbacks, the shadow banker had granted a loan of 6 billion rupees to a company called DoIT Urban Ventures (India) Pvt Ltd, owned by his three daughters, Roshni Kapoor, Rakhee Kapoor Tandon and Radha Kapoor.

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