TIO
Finance Minister Nirmala Sitharaman has said that the crisis in Yes Bank is not something which has cropped up suddenly. “We had been keeping an eye on the bank since 2017,” Finance Minister Nirmala Sitharaman said at a press briefing on Friday evening.
She said that the Reserve Bank of India (RBI) recommended after a thorough scrutiny in 2018 that the current leadership (MD and CEO) of Yes Bank cannot continue. “A new CEO was appointed in September 2018 as a result. Cleaning up of bank started since then,” said Sitharaman adding that Rs 1 crore was levied as fine on the bank.
“Sebi also started investigation from September 2019 on insider trading related matter,” said the finance minister.
The management kept telling us that efforts are being made genuinely for fresh infusion of cash, but nothing materialised, said Sitharaman giving a timeline of the issues with the beleaguered financial institution.
She also said that the RBI has taken certain steps to contain the crisis and protect the interests of the depositors. “Among them, the central bank was put under moratorium, withdrawal limit was capped, a new administrator was brought in by superseding the management, and a scheme prepared by the RBI to restructure the bank,” said Sitharaman.
She also said that employment will be protected for one year, the RBI has assured. “We have been monitoring the bank every day since the last six months,” said Sitharaman.
Earlier in the day, the finance minister had assured the depositors that the government is constantly coordinating with the RBI to ensure that depositors are not troubled. “We have been monitoring the situation. Now that RBI has come up with a plan, a resolution will be found at the earliest. I want to assure the depositors and investors that both the RBI and the government are looking into the issue. There is no need to panic, their money is safe,” Sitharaman had said.
“We have taken a course which will be in everybody’s interest. RBI has assured that a resolution will be found as soon as possible,” she added.
The minister also said that though there is a cap of Rs 50,000, the RBI has already announced that if people need more funds for exigencies, they can follow the guidelines given by the central bank.
RBI governor Shaktikanta Das had said earlier in the day that Yes Bank resolution will be done very swiftly and that 30 days is an outer limit.
On Thursday evening, the central bank put Yes Bank under moratorium and capped withdrawals at Rs 50,000 per account till further orders. The central bank had taken over the Mumbai-based bank’s board for 30 days amid a serious deterioration in India’s fifth-largest private sector lender’s financial position.
The governor said that the decision was at a “larger level” and not at the individual entity level. The move is aimed at ensuring the safety of financial system, he added.
Yes Bank shares tumbled 60 per cent as markets took a hit and banking stocks came under pressure after RBI actions over the crisis.
