The Centre has directed the Reserve Bank of India (RBI) to look into the causes of the crisis at Yes Bank and to pin responsibility on the individuals responsible and those who failed to address the problems at the bank, Union Finance Minister Nirmala Sitharaman said on Friday.
“While our government is completely committed to ensure that the depositors’ interest is completely safeguarded, equally I want the RBI to ensure that due process of law is set to roll with a sense of urgency, so that we should find out as to who led to this problem of this size and magnitude at Yes Bank,” said Ms. Sitharaman.
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She added that she has asked the central bank to assess the adequacy of regulatory and supervisory norms as well.
Speaking to journalists just after RBI unveiled its restructuring plan for the Bank, the Finance Minister expressed confidence that the plan would be effective within 30 days, the moratorium period imposed by the RBI to limit withdrawals from the Bank. While she acknowledged that there would be a “period of pain” for depositors, she insisted that all deposits and liabilities would be honoured and will continue unaffected as before, and assured Yes Bank’s employees that their jobs and salaries were assured for at least one year.
Ms. Sitharaman rebuffed accusations that the government had failed to monitor the Bank’s troubles. She claimed the RBI had been keeping tabs on the situation since 2017, and had taken steps to deal with the governance and leadership issues, culture of weak compliance, wrong asset classification and risky credit decisions. Central agencies had pushed for management changes, slapped fines, investigated irregularities and urged equity infusions in an effort to improve Yes Bank’s health, she said.
Countering Opposition criticism, Ms. Sitharaman claimed that Yes Bank’s exposure to stressed corporates such as the Anil Ambani group, Essel group, DHFL, IL&FS and Vodafone existed before 2014 during the UPA regime. She accused the “so-called, self-appointed competent doctors” of the Congress of having bungled the handling of three other banks in crisis — Global Trust Bank, United Western Bank and Ganesh Bank of Kurudher.
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“In all three, they just merged and washed their hands off. How many people did they take action against?” asked Ms. Sitharaman. “I have assured that I will not allow any institution to fall off the cliff.”
While she acknowledged that there would be a “period of pain” for depositors, she insisted that all deposits and liabilities would be honoured and will continue unaffected as before, and assured Yes Bank’s employees that their jobs and salaries were assured for at least one year.
Ms. Sitharaman rebuffed accusations that the government had failed to monitor the Bank’s troubles. She claimed the RBI had been keeping tabs on the situation since 2017, and had taken steps to deal with the governance and leadership issues, culture of weak compliance, wrong asset classification and risky credit decisions. Central agencies had pushed for management changes, slapped fines, investigated irregularities and urged equity infusions in an effort to improve Yes Bank’s health, she said.
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Countering Opposition criticism, Ms. Sitharaman claimed that Yes Bank’s exposure to stressed corporates such as the Anil Ambani group, Essel group, DHFL, IL&FS and Vodafone existed before 2014 during the UPA regime. She accused the “so-called, self-appointed competent doctors” of the Congress of having bungled the handling of three other banks in crisis — Global Trust Bank, United Western Bank and Ganesh Bank of Kurudher.
“In all three, they just merged and washed their hands off. How many people did they take action against?” asked Ms. Sitharaman. “I have assured that I will not allow any institution to fall off the cliff.”
