Union Finance Minister Nirmala Sitharaman on Friday said the central government was aware of the crisis at Yes Bank since 2017, and had been routinely monitoring the bank’s activities. Late on Thursday, the Reserve Bank of India had imposed a moratorium on the cash-strapped Yes Bank, and restricted withdrawals at Rs 50,000 for each account.
“It is not that the Yes Bank matter has come up yesterday or today,” Sitharaman said at a media briefing. “I would like to place it on record that RBI has been consistently monitoring situation since 2017.” The finance minister added that after a thorough review in 2018 by the Reserve Bank of India, a new chief executive officer was appointed in September that year and the bank was fined Rs 1 crore.
“SEBI [Securities and Exchange Board of India] also started investigation from September 2019 on insider trading-related matter,” the finance minister said. Yes Bank’s management repeatedly told the Centre that renewed efforts for cash infusion were being made, but to no avail, she said, adding that the bank’s activities were being monitored regularly for the last six months.
Sitharaman said the RBI had taken measures to contain the crisis and protect the interests of account holders. The restructuring scheme by the central bank will be fully effective within 30 days, the finance minister said. The State Bank of India has also expressed willingness to invest in Yes Bank, she added. Earlier on Thursday, the board of the State Bank of India gave an in-principle approval to the lender to explore opportunities to invest in Yes Bank.
The finance minister said employment and salary of employees of Yes Bank has been assured for one year, and asserted that deposits and liabilities will remain unaffected. “RBI governor has assured me that there will be no loss to any depositor,” Sitharaman said. “Both RBI and government are looking at the Yes Bank issue in detail, we have taken a course which will be in everyone’s interest.”
Sitharaman also said Anil Ambani Group, Essel Group, Dewan Housing Finance Corporation, Infrastructure Leasing & Financial Services, and Vodafone were some of “very stressed” companies to whom Yes Bank lent funds.
She said the Opposition was “very keen to point fingers on this”, NDTV reported. “Not that I want to put a blame on them, but I have reason to do so,” she said, claiming that the government faced “several challenges” because of the way the previous Congress-led government handled things.
Earlier reports claimed that the Centre has asked the State Bank of India and Life Insurance Corporation to collectively pick up 49% stake in Yes Bank. The government was said to be considering a bailout because it fears that the collapse of Yes Bank will have a domino effect on the banking sector.
On Thursday, RBI said it took the decision to impose restrictions on Yes Bank due to the “absence of a credible revival plan, and in public interest and the interest of the bank’s depositors”.