On Friday, Union Finance Minister Nirmala Sitharaman addressed the press conference over the Yes Bank crisis, a day after the RBI imposed a moratorium on the bank, superseding its Board of Directors. In a detailed press conference, the Finance Minister traced through the history of the collapse of the troubled lender stating that the main aim of the government at the moment would be to 'identify the roles played by various individuals in creating the problem' along with 'safeguarding depositors interests'
"The Yes Bank matter has not just come up yesterday, since 2017, the RBI has been closely monitoring them. I can speak for May 2019 onwards, where I have been directly involved with RBI, I want to assure the people, that the government has been continuously monitoring the matter together with the RBI," she Nirmala Sitharaman.
"Since 2017, the RBI has been continuously monitoring & scrutinizing Yes Bank. It noticed that there were governance issues and weak compliance in the bank. There was a wrong asset classification together with risky credit decisions," she added.
The Finance Minister added that one of the main problems with the bank was that since 2004 it had been under the same management. "In September 2018, the RBI clearly said leadership needs to change. CEO was asked to change in intention of keeping the bank healthy," she said.
Sitharaman added that after the appointment of the new CEO, cleaning up of the bank started after which RBI began to look at newer challenges. "The main promoter was asked to let go off shares, but he asked for more time, as a result, he had to be compelled to let go off his shares. Not only this but malpractices amongst top execs and the chairman were also found," she stated.
Sitharaman revealed that post the appointment of the new CEO in March 2019, the restoration of the health of the bank began with the help of RBI during which other problems began to emerge mainly the accusation by the SEBI of insider trading. "During this time, the former Deputy Governor of RBI was also appointed on the board of Yes Bank, a new CFO was appointed."
"Promises of money and equity were made. Genuinely attempts were made of equity inclusion, nothing materialized. RBI gave them more time for a fresh infusion of cash, space and margin were made but it didn't happen at all. In November 2019, no hope was found for the restoration of the bank's health despite genuine attempts being made."
She also spoke about the resignation of Uttam Prakash Agarwal, Chairman of the Audit Committee who had spoken exclusively to Republic TV and acted as a whistleblower in the case revealing that no proper documentation or no proper process was followed especially for the appointment of the Chairman which was not done taking into consideration the Board's views.
Nirmala Sitharaman stated that the government had asked the RBI to act so that the due process of law could take its course with 'a sense of urgency'.
"I have asked RBI to ago into assessing what has caused these difficulties for the bank and clearly identify the roles played by various individuals in creating the problem and not addressing it," she said. "The Government is committed to ensuring depositors' interests are seriously safeguarded," she added.
Lastly, the Finance Minister stated that the imposing of a moratorium was not something to worry about and the move of SBI along with other financial institutions buying a stake in the bank was done for its "reconstruction process."
"RBI has assured that the reconstruction plan will come into play within the moratorium period. SBI has expressed willingness to invest in Yes Bank. Deposits, liabilities will not be affected. Employment and salaries assured for at least one year," she said.