Troubled private sector lender Yes Bank was placed under a "moratorium" on late Thursday, with the RBI capping depositor withdrawals at Rs 50,000 per account for a month and superseding the board with immediate effect.

If depositors wish to withdraw more than Rs 50,000, then they will have to seek RBI's permission to do so. 

"The financial position of Yes Bank Ltd. has undergone a steady decline largely due to inability of the bank to raise capital to address potential loan losses and resultant downgrades," said RBI.It is said that the bank has also experienced serious governance issues and practices in recent years which have led to a steady decline of the bank.

"This has been done to quickly restore depositors’ confidence in the bank, including by putting in place a scheme for reconstruction or amalgamation," it added. 

According to reports, the RBI will allow withdrawal of over Rs 50,000 only in the following unforeseen circumstances:

• For medical treatments of the depositor or any of their dependents.

• For wedding or other ceremonies of the depositor or his/her dependents

• For higher education expenses of the depositor or any person dependent on him for education in India or abroad.

• For any other unavoidable emergency

The Reserve Bank has assured the depositors of the bank that their interest will be fully protected and there is no need to panic. 

It also appointed former Chief Financial Officer of SBI, Prashant Kumar as the administrator of Yes Bank.

The actions come hours after sources said the government has approved a plan wherein State Bank of India (SBI) and other financial institutions would bailout Yes Bank.

If this bailout plan was implemented, it would have been the first major instance in many years where a private sector lender would be bailed out using public money.

The imposition of a moratorium on Yes Bank comes after similar action was taken against fraud-hit cooperative lender PMC Bank in September, where depositors are still in the lurch.