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Puneet Dhawan of Accor is brimming with ideas on ways to revive the hospitality sector
Would a bailout of YES Bank, currently in the works, be a case of privatisation of profits and nationalisation of losses?
Bank unions think so, as State Bank of India, which is majority owned by the government, may step in to take over the troubled private sector lender. They point out that there are precedents including Oriental Bank of Commerce (OBC), a Delhi-based nationalised bank, acquiring Global Trust Bank (GTB), and IDBI Bank acquiring United Western Bank (UWB).
SBI said its board has given an in-principle approval to explore investment opportunities in YES Bank.
“Today, once again, the principle of nationalisation of losses and privatisation of profits is being followed in asking a public sector bank to bail out a private sector bank,” said Devidas Tuljapurkar, Joint Secretary, All India Bank Employees Association.
Tuljapurkar said the RBI should carry out a special inspection of all the private sector banks to assess the extent of their non-performing assets. “If SBI can bail out YES Bank, then the government should do the same in the case of Punjab and Maharashtra Co-operative (PMC) Bank, Pen Urban Co-operative Bank and Rupee Co-operative Bank,” he added.
Referring to SBI coming to the rescue of YES Bank, KS Krishna, General Secretary, All India State Bank Employees’ Association, said on the one hand policy makers eulogise the privatisation of banks and, on the other, they want public sector banks to bail out their private sector peers when the latter get into trouble.
The RBI, in a statement on Thursday, said it has, in consultation with the Centre, superseded the YES Bank Board for 30 days owing to serious deterioration in the financial position of the lender. It took this action in exercise of the powers conferred under Section 36 ACA of the Banking Regulation Act, 1949.
“This has been done to quickly restore depositors’ confidence in the bank, including by putting in place a scheme for reconstruction or amalgamation,” the statement said. Prashant Kumar, former DMD and CFO of SBI, has been appointed as the administrator.
In exercise of the powers conferred by the Banking Regulation Act, 1949, the Centre, after considering an application made by the RBI, made an order of moratorium in respect of YES Bank for the period from 6 pm on March 5 to and inclusive of April 3, 2020.
During the moratorium, withdrawal has been capped at ₹50,000 per depositor. Depositors can withdraw up to ₹5 lakh from their deposits to meet select emergency expenses.
Puneet Dhawan of Accor is brimming with ideas on ways to revive the hospitality sector
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