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Thursday 2 July 2020

Sitharaman steps in to sort out Yes Bank mess

The finance minister said that the government wanted the RBI to ensure a proper legal process urgently to address the issues with the bank

Speaking on the ongoing crisis in Yes Bank, Union Finance Minister Nirmala Sitharaman has said that the government is committed to ensuring the protection of the interests of customers. “We have sought a report from the RBI in this matter,” she said.

The finance minister said that the Reserve Bank of India (RBI) had been asked to create a new board under the reconstruction scheme.

In a press conference after the RBI dissolved the board of Yes Bank and set the withdrawal limit of deposit account holders, the finance minister said that the bank was being monitored since 2017 and activities related to it were monitored every day. She said that since 2017, the central bank had identified issues like bad governance, weak compliance, wrong asset classification with the said bank.

Sitharaman said that, after finding out the risky decisions on loans, the RBI suggested a change in the Yes Bank management. She said that these decisions were made in the interest of the bank and a new CEO was appointed in September 2018. The minister said that the investigating agencies found irregularities in Yes Bank.

Sitharaman said that the government wanted the RBI to ensure a proper legal process with a sense of urgency. She said that the restructuring plan would be fully effective in 30 days and that SBI had expressed a desire to invest in Yes Bank.

The government has approved SBI’s plan to buy shares in Yes Bank. Its official announcement will be made soon, said sources. SBI will lead the consortium buying stakes in Yes Bank.

The SBI and LIC together may buy 49% of the stakes of Yes Bank for ₹ 490 crore. This report led to a 27% jump in Yes Bank shares on the NSE. On the other hand, SBI’s stock declined by 5%. However, buying from lower levels led to recovery and closed with gains of around 1%.

Sitharaman added that the jobs, salaries of the employees of Yes Bank had been assuredly safe for one year and that the Anil Ambani Group, Essel, DHFL, ILFS, Vodafone were among the risky companies to which Yes Bank lent.

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