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Friday 29 May 2020

Gujarat SPV withdrew Rs 265 crore from Yes Bank day before RBI imposed limit

Maharashtra Congress alleged this showed Prime Minister Modi and Home Minister Shah were worried only about Gujarat while Maharashtra's fund was stuck in Yes Bank too, but it was not informed


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In India

मनसे ने बढ़ाए मदद के हाथ; राज्य सरकार के काम से नाखुश

मनसे नेता ने महाराष्ट्र की जनता से अपील की है, आप लोग घबराए नहीं, सोशल डिसतेनसिंग का पालन करें, मुसीबत आई और इसका हम मिलकर सामना करेंगे

The Vadodara Smart City Development Company, a special purpose vehicle (SPV) of the Vadodara Municipal Corporation (VMC) of Gujarat, on Wednesday (4 March), just a day before the Reserve Bank of India (RBI) set a ceiling on withdrawal of maximum Rs 50,000 per customer from Yes Bank, withdrew Rs 265 crore from the bank, said an official on Friday (6 March).

SPV Chief Executive Officer (CEO) and Deputy Commissioner of Municipal Corporation Sudhir Patel said that the Centre had sent this fund as a grant under the Smart City Mission, which had been deposited in the local Yes Bank branch.

The money has been transferred to Bank of Baroda, the CEO said.

Gujarat Dy CM clarifies about Rajkot

Gujarat Deputy Chief Minister Nitin Patel said on Saturday (7 March) that the Rajkot Municipal Corporation had written a letter to the RBI, informing the central bank that about Rs 160 crore of the smart city mission fund had been stuck in the troubled private sector Yes Bank.

Patel said that, apart from Rs 160 crore, the government did not have any other deposits in the capital-deficient Yes Bank.

Patel additionally handles the finance department. He told reporters in Gandhinagar, “As per the information given to me, Rs 160 crore of RMC’s Smart City Mission Fund is deposited in Yes Bank. The money belongs to the central government and the RMC, and so the municipal corporation has written a letter to the Reserve Bank requesting that it release the money as per requirement.”

It indeed appears prima facie that the state government does not have any other deposit in Yes Bank. But the Indian National Congress (INC) has a bone to pick.

Allegation by INC

Assuming that the Gujarat SPV had been informed about a pending restriction on withdrawals to be imposed by the RBI, Maharashtra Congress spokesperson Sachin Sawant alleged that this showed that Prime Minister Narendra Modi and Union Home Minister Amit Shah were worried only about Gujarat and not the whole country.

Sawant said the BJP-led Pimpri-Chinchwad Municipal Corporation in Maharashtra had Rs 905 crore stuck in Yes Bank, but it was allegedly “not informed” by the central government.

SBI to buy 49% of Yes Bank

Earlier, on Thursday (5 March), the RBI had imposed a 30-day ban on Yes Bank and fixed the withdrawal limit to Rs 50,000 for its customers. A day later (6 March), the RBI had released the restructuring plan for Yes Bank.

Under the plan, the State Bank of India (SBI) is supposed to buy a 49% stake in Yes Bank by purchasing Rs 2,450 crore worth of shares of the bank at a price of Rs 10 a share.

The country’s largest commercial bank SBI announced this on Saturday (7 March). It clarified that the deposits and liabilities in the restructured bank would remain the same after this purchase.

Yes Bank had earlier failed to raise capital. The SBI said in a statement, “Yes Bank has 255-crore shares of Rs 2 per share. SBI will be issued 245 crore shares at a price of Rs 10 per share for Rs 2,450 crore. This will be 49 per cent of the share capital of the reconstructed bank.”

The statement said that SBI could not reduce its stake to less than 26% for three years of capital infusion.

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