Reserve Bank of India (RBI) has requested depositors of Yes Bank not to panic after the government capped withdrawals from the struggling lender at Rs 50,000. In a move reminiscent of the PMC Bank crisis, except on a bigger scale, the government said depositors will not be allowed to withdraw more than Rs 50,000 effective 6 pm of March 5 until April 5.

Experts suggest that the moratorium is seen as a precursor to a shotgun marriage with another player — tipped to be SBI and LIC as per media reports — to help resuscitate Yes Bank.

Sure enough, soon after the government capped withdrawals, the RBI said it would supersede Yes Bank’s board and appoint its own administrator.

“The financial position of Yes Bank has undergone a steady decline largely due to inability of the bank to raise capital to address potential loan losses and resultant downgrades, triggering invocation of bond covenants by investors, and withdrawal of deposits,” RBI said.

“The bank has also experienced serious governance issues and practices in the recent years which have led to steady decline of the bank,” the RBI said, adding that steps taken by Yes Bank to attract new investors had failed.

After taking into consideration these developments, the Reserve Bank came to the conclusion that in the absence of a credible revival plan, and in public interest and the interest of the bank’s depositors, it had no alternative but to apply to the Central Government for imposing a moratorium, the central bank said.

“The Reserve Bank assures the depositors of the bank that their interest will be fully protected and there is no need to panic,” RBI said.

In terms of the provisions of the Banking Regulation Act, the Reserve Bank will explore and draw up a scheme in the next few days for the bank’s reconstruction or amalgamation “and with the approval of the Central Government, put the same in place well before the period of moratorium of thirty days ends so that the depositors are not put to hardship for a long period of time,” RBI added.