Money & Banking

Yes Bank crisis: I want to assure depositors that their money is safe, says FM Nirmala Sitharaman

Our Bureau New Delhi | Updated on March 06, 2020 Published on March 06, 2020

FM Nirmala Sitharaman

'RBI will look into what went wrong and fix responsibility'

Finance Minister Nirmala Sitharaman on Friday assured depositors that their money in YES Bank is safe and said the Reserve Bank of India will look into what went wrong at the private sector lender and try to fix individual responsibility.

“I had earlier said we will not allow any institution to fall off the cliff...we have been closely monitoring banking institutions and shadow banks. For the last six months, the monitoring has been almost on a daily basis,” she said at a press conference, a day after the government and the RBI set in motion a bail out for YES Bank.

Stating that the RBI has been monitoring developments at the private sector lender since 2017, she said it had noticed governance issues and there were serious concerns over the weak regulatory compliance at YES Bank, besides wrong asset classification and risky credit decisions.

“It is not that the YES Bank matter has come up yesterday or today...RBI has been closely monitoring and scrutinising YES Bank since 2017,” she said.

The Minister said the RBI advised a change in management on finding risky credit decisions. These were taken in the interest of the bank’s health and a new CEO was appointed and cleaning up of the bank started, she added.

“I have asked the RBI to assess the problem at YES Bank and clearly identify the role played by individuals in creating the problem and not addressing the problems,” Sitharaman stressed, adding that she has asked RBI to ensure that due process of law is followed with a sense of urgency.

She said the bank had been fined by the RBI on at least three occasions and was being investigated by SEBI on insider trading charges.

Risky corporate exposure

The Minister noted that the bank had risky corporate exposure and she listed out Anil Ambani Group, Essel, IL&FS, DHFL and Vodafone among the stressed corporates it had exposure to, some of which were from before 2014.

Retorting to former Finance Minister P Chidamabaram, Sitharaman said she has highlighted this as the Opposition has been keen to point fingers and said that “self-appointed competent doctors” had handled the collapse of United Western Bank in 2006, which was merged with IDBI Bank.

She said the government and the RBI decided to intervene after several genuine attempts by the bank to get investors did not materialise.

Stressing that the restructuring scheme for YES Bank will be completed in 30 days, Sitharaman also sought to assure depositors. “We are ensuring customers interest are protected. We can assure all depositors that their money is safe,” she said.

She further said that State Bank of India has expressed a willingness to invest YES Bank.

We will not allow any institution to fall off the cliff...we have been closely monitoring banking institutions and shadow banks.”

 

Published on March 06, 2020

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
Yes Bank crisis
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.