The government and the RBI didn’t bother to read the balance sheet of the Yes Bank , former Finance Minister P. Chidambaram said pointing out to the unusual growth in the loan book at the rate of 35% a year between March 2014 to March 2019.
The loan book registered a spike especially in 2016-17 and 2017-18, the two years immediately following demonetisation, he said adding that the RBI and the government both should be made accountable.
It was not banking but buccaneering, Mr. Chidambaram said. “Did no one in the RBI and the government read the balance sheet of the bank at the end of every year? Why did nothing change after the CEO was replaced and a new CEO appointed in January 2019?”
He questioned the fact that the financial health of the bank didn’t improve even after a former Deputy Governor of the RBI was appointed to the Board of the bank in May 2019.
The alarm bells should have rung when the bank reported it’s first ever quarterly loss in the quarter Jan-March 2019.
“The Yes Bank fiasco is only part of the mismanagement of financial institutions under the watch of the BJP government,” Mr. Chidambaram said.
As per the resolution plan, the SBI has proposed to invest ₹2,450 crore to pick up a 49% stake in the restructured capital of the Bank at not less than ₹10 per share.
“This is bizarre, when the net worth of the Bank is perhaps zero,” Mr. Chidambaram said.
Saying the depositors’ interests should be completely protected, he said he believes the SBI didn’t volunteer to rescue the bank. “Just like LIC did, SBI is also doing a command performance.”
Reacting to Finance Minister Nirmala Sitharaman’s comment that most of these loans were extended during the Congress-led UPA government’s tenure, Mr. Chidambaram said: “Sometimes when I listen to Finance Minister Nirmala Sitharaman I feel that UPA is still in power and I am the Finance Minister while she is in Opposition.”