The back-and-forth over the Yes Bank crisis is gaining momentum by the hour, with the ruling NDA pinning the blame on its predecessor UPA government for the private lender's troubles, while the latter hitting back. After Finance Minister Nirmala Sitharaman held the Congress-led government responsible for the 'exposure' of Yes Bank to stressed corporates, senior Congressman P Chidambaram said her assertion was 'expected' and in contravention of her own claim.
"Listened to FM’s address to the media. It is obvious that the crisis has been in the making since 2017 and the government did practically nothing except “talk to the RBI”. As expected, the FM has indirectly blamed the UPA for the near collapse of YES Bank contrary to her own claim that the crisis started in 2017," P Chidambaram wrote on Twitter.
The UPA-era FM pointed out that Sitharaman did not acknowledge the numbers of the loan book of Yes Bank and how she "did not explain how the loan book miraculously jumped from Rs 55,633 crore in March 2014 to Rs 2,41,999 crore in March 2019". The NDA took power in late May 2014. P Chidambaram also stated that the UPA did not allow any bank to reach a state of collapse and during that period, weak banks were merged with other banks "well in time to avoid a crisis".
Rebuking Nirmala Sitharaman on her charge that "self-appointed competent doctors" had to merge crisis-hit United Western Bank with state-run IDBI in 2006, Chidambaram said the decision in that regard was taken by the-then RBI Governors and suggested her to seek an explanation on the same. He added that the current FM will blame the legacy of the UPA for the rest of the tenure of her government.
The decisions to merge were taken by RBI Governors Dr C Rangarajan and Dr Y V Reddy. Why doesn’t the FM call them and ask them to explain their decisions? She might find that the decisions were correct and taken by competent Governors.— P. Chidambaram (@PChidambaram_IN) March 6, 2020
What is the government doing today? Is the government not merging weak public sector banks with stronger public sector banks?— P. Chidambaram (@PChidambaram_IN) March 6, 2020
Naturally, FM blamed the “legacy” of UPA. She will say that for the rest of the tenure of the BJP government!
On Thursday, RBI appointed former SBI CFO Prashant Kumar as administrator for Yes Bank and imposed a moratorium on the troubled lender capping its withdrawals at Rs 50,000, for a period of 30 days. The RBI stated that the decision was taken to a serious deterioration in the financial position of the bank and has been done to restore depositors' confidence in the bank. Yes Bank has also cancelled all fund withdrawal requests made by clients to their YES bank accounts and its stocks lost more than half its value.