PhonePe services hit after Yes Bank put under moratorium by RBI

The netbanking and UPI services of Yes Bank, which is the only partner bank for PhonePe, were down.

Money Banking

The Reserve Bank of India (RBI) placed a moratorium on Yes Bank on Thursday evening and capped withdrawal limit at Rs 50,000, sending depositors into a tizzy. However, not only were the depositor’s accounts affected, but also businesses that used Yes Bank as their banking partner or the bank’s Application Programming Interface (API). Yes Bank’s net-banking services were also down.

According to the National Payments Corporation of India (NPCI), 21 third party applications use Yes Bank as the payments service provider (PSP). Yes Bank was a leader in Unified Payment Interface (UPI) transactions. On Thursday, Flipkart’s UPI service PhonePe took a hit, as Yes Bank is the only partner bank of the service. PhonePe has been down since last night.

According to Inc42, Yes Bank had processed 514 million out of 1.31 billion UPI transactions in January 2020.

Why @PhonePe_ server's are down?.. unable to transfer money #Phonepesupport — Ayush Bharwaj (@Ayush665) March 6, 2020

Is it some kind of joke. My money is stuck for more than 52 hours now. And you are just dropping a tweet. Are u playing with public money? — Shamik Bhattacharjee (@shamik8185) March 6, 2020

The outage was confirmed by PhonePe’s founder and CEO Sameer Nigam. “Dear @PhonePe_ customers. We sincerely regret the long outage. Our partner bank (Yes Bank) was placed under moratorium by RBI. Entire team's been working all night to get services back up asap. We hope to be live in a few hours. Thanks for your patience. Stay tuned for updates!,” he tweeted.

Rahul Chari, the founder and CTO of PhonePe, tweeted that they have started disbursing merchant settlements, after which services will be enabled for users.

Peer-to-merchant platform BharatPe also has a partnership with Yes Bank, but wasn’t badly affected as it reportedly also has ICICI Bank as its banking partner.

Payment gateway company Razorpay stated that while most of their services were not affected (including the payment gateway), but hinted that some others might get hit.

“Our payment gateway services are unaffected. While some other services may get affected; our team is reaching out to the affected businesses via email. Our team is working to ensure there is no disruption in services,” Razorpay said in a tweet.

Financial services company Zerodha told customers that all fund withdrawal requests made by customers who have Yes Bank accounts have been cancelled. “We have cancelled all fund withdrawal requests made by clients to their YES bank accounts so that the money doesn’t get blocked. Please change, if your primary bank account is YES, to any other and withdraw the funds,” founder Nithin Kamath said.

According to reports, Swiggy and Udaan have also been affected.

The RBI on Thursday evening placed the bank under moratorium for 30 days and capped the withdrawals from Yes Bank at Rs 50,000. It also superseded the board of directors of the private lender for 30 days and appointed former State Bank of India (SBI) Chief Financial Officer Prashant Kumar as the bank's administrator.

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

This development also caused some panic among a section of Yes Bank account holders who rushed to ATMs after the RBI announcement and many reportedly found that the ATMs had run out of cash.

With IANS inputs