Congress leader Rahul Gandhi on Friday launched a scathing but unsubstantiated attack on Centre after the RBI imposed a moratorium on Yes Bank on Thursday. The Reserve Bank of India (RBI) on Thursday also appointed former SBI CFO Prashant Kumar as administrator for Yes Bank, as per a statement released by the body.
Rahul Gandhi, who also protested outside Parliament over the suspension of 7 Congress MPs over the ruckus that has been witnessed over the last few days in the Budget session, furthered his attack on the government over the state of the economy, this time citing the developments at the private lender to claim that Modi's government has 'destroyed' India's economy. However, there was little in the way of specifications, which there ought to have been given that the underlying NPA problem that continues to impair India's banking sector has its roots in the UPA government.
No Yes Bank.— Rahul Gandhi (@RahulGandhi) March 6, 2020
Modi and his ideas have destroyed India’s economy.
Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday explained that the decision to take over the commercial bank for 30 days was taken on a larger basis to ensure the resilience of Indian banking sector. He said that the moratorium could be rolled back sooner than thought and that a scheme for the bank's revival would be forthcoming.
Earlier in the day, the Madhya Pradesh Congress had also slammed the Narendra Modi-led BJP government after the RBI imposed a moratorium on Yes Bank. Taking to Twitter, MP Congress cited the ban by RBI on withdrawal of more than ₹ 50,000 and wrote, "you will deposit your money in the bank, then you will not let the money be withdrawn from the bank.". This statement could be sarcastically intuned with the BJP government's constant push for opening bank accounts ever since the party came in power and the demonetization that was imposed later.
"The tweet in Hindi read as, "Now 'No' to the customers of Yes Bank: Yes Bank is also sinking due to the wrong policies of Modi Ji. RBI has banned withdrawal of more than ₹ 50,000. Understand Chronology. First, you will deposit your money in the bank, then you will not let the money be withdrawn from the bank."
Furthermore, Congress Leader and former Finance Minister P Chidambaram also accused the Centre of abdicating it responsibility and cited the example of PMC Bank, along with Yes Bank.
"The BJP has been in power for 6 years, their ability to control and regulate financial institutions is being exposed. First PMC Bank, now Yes Bank. Is the government worried at all? Can he escape his responsibility? Is there a third bank in the line," tweeted Chidambaram.
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 tumbled by 10%.
The SBI board has given "in-principle" approval to invest in the Yes Bank after the bank was placed under moratorium. The government has asked SBI and LIC to bail out the private lender which has stressed assets of Rs 45,000-50,000 crore, by forming a consortium of banks and picking up a stake - 24.5 percent stake each. JP Morgan on March 5 slashed the target price on shares of YES Bank to Re 1, in view of the stake sale.
Yes Bank started facing a crisis as it accumulated many bad loans in 2018. Moreover, when RBI refused to extend the term of founder Rana Kapoor as chief executive in 2018, its management was severely hit with his successor Ravneet Gill managing to raise only one round of funds through a share sale to institutional investors. In a bid to revive the bank, Gill has been in talks over the past 18 months with equity investors but could not come up with a concrete investment plan.