Saying ‘Yes’ to bailout

Though an interesting outcome of the Yes Bank fiasco is the acknowledgement of the role of public sector banks, with the State Bank of India (SBI) having been asked to play the role of saviour, it has thrown open some other points for discussion too. One, why should the government take the responsibility of saving a purely privately owned bank which was run as a private fiefdom of the promoter-owner? Does this not amount to putting the interests of minority shareholders of the SBI at risk? Sadly, when it comes to the question of compensation to be paid to the employees or pensioners of the SBI, the same Finance Ministry takes a different stand and begins talking about its ‘paying capacity’.

B.C. Unnikrishnan Nair,

Kuthiathode, Kerala

The move to suspend normal business operations of Yes Bank has put thousands of customers to untold suffering; even though the brisk bailout plan offers some respite. Given the exposure of Yes bank to corporate loans, it is unclear how the money is going to be recovered, if at all. Bad loans may reflect the underlying woes in the borrower industries, ranging from real estate to power (Editorial, “Banking on bailouts: On Yes Bank crisis,” March 8). At the same time, one cannot also rule out the possibility of bad loans echoing the greedy intentions of a few unscrupulous businessmen, who want to follow the footprints of Vijay Mallya and Nirav Modi. It would do no harm if the investigative agencies round up the potential economic fugitives, perhaps already in the radar for other economic offences and frauds, indebted to Yes Bank, who want to cross the shores without paying their dues.


Tiruchi, Tamil Nadu.

Yes Bank started its operation in January 2004. From its inception, it adopted an aggressive strategy to attract customers. It offered an interest rate of 2 percentage points above the usual rates offered by other banks on Savings Bank accounts. Also, Yes Bank funded its credit disbursements through both deposits and bond issues, while other banks relied primarily on deposits. Its business figures rose at a higher rate than those of other banks. These incidents should have made the RBI monitor its transactions more closely. But that didn’t happen. In order to avoid such mishaps in future, a thorough investigation should be done of all the Annual Financial Inspection Reports compiled by the Reserve Bank of India from 2015 on Yes Bank.

V.P. Bhaskaran,


The fallout of the Yes Bank crisis marks the first such instance involving a new-age private sector lender. The RBI, which has been facing lot of flak on supervision lapses in the cases of Punjab National Bank (PNB) and Punjab and Maharashtra Cooperative Bank (PMC), should have prevented the beleaguered Yes Bank from being disintegrated. The unfolding events at Yes Bank that led to its down-slope point to serious lapses in the way risk management systems are designed in the Indian banking system and RBI’s scantiness as a supervision authority. Promoter-driven banks need special regulatory focus and corporate governance loopholes need to be plugged. The story of Yes Bank throws up an important cautionary lesson to other private banks that mere focus on technology and stalking high growth in relying on corporate banking and wholesale deposits to boost balance sheet will not work. Sagacious lending and high corporate governance are crucial for any bank’s survival.

R. Sivakumar,


A detailed study of banks failing to perform efficiently may reveal that what is to blame is the attitude of some of the big borrowing entities, who avail all sorts of concessions and exemptions, avail the lion’s share of banks’ loan, and later feel that it is their privilege not to bother about repayment. The government should think in terms of arresting them and confiscating all their and their benami assets instead of bailout or bail in schemes.

A.G. Rajmohan,


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Printable version | Mar 31, 2020 7:19:22 PM | https://www.thehindu.com/opinion/letters/saying-yes-to-bailout/article31017256.ece

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