YES Bank moratorium hits PhonePe services

Digital payment firm PhonePe suffered an outage in services after its banking partner YES Bank’s moratorium notice by RBI came in effect on Thursday.

Sameer Nigam, PhonePe’s co-founder and CEO, on Friday confirmed the outage through a tweet. He wrote, “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!.”

On Thursday, the Reserve Bank of India limited capital-starved YES Bank’s withdrawal to Rs 50,000 for the next one month till April 3, 2020.



The move, which went effective from 6 pm on Thursday led to a halt in United Payments Interface (UPI) transactions. PhonePe, being the largest payments partner of YES Bank, was among the worst affected.

Apart from restricting the withdrawal limit, the apex bank also appointed ex-SBI CFO Prashant Kumar to oversee the moratorium period.

RBI had to take over the private sector lender after the latter failed to raise an adequate amount of equity capital to maintain the viability of its business.

YES Bank has been at the forefront of creating a fintech ecosystem in the country, enabling startups through YES Fintech initiatives. It also recently launched multiple API banking services to help startups.

In fact, the bank surpassed all leading private banks in UPI transactions, contributing more than 39% of it in January this year. It processed 514 million transactions out of 1.3 billion UPI transactions in that month.

PhonePe had plans to enable nearly 1 million merchants on the network to offer cash withdrawal services to customers who are nearby at a fee fixed by them.

IN an interview with ET, the company's head of Offline Business Development, Vivek Lohcheb, had said that PhonePe wanted to increase merchant engagement on the platform by creating a new value service for both local shop owners and consumers.