'Government vigilance could have prevented problem': KTS Tulsi question Centre on Yes Bank

After the Reserve Bank of India imposed a moratorium on troubled private lender Yes Bank, Congress leader KTS Tulsi has put the onus on the government, stating that Yes Bank's debacle happened "because of the sheer negligence of the government." He slammed the Centre alleging that as a precaution only the CEO of the bank was changed and no scrutiny was made despite having several reports of malfunctioning of the bank.

"Since 2017, reports were being received of malfunctioning of the bank and only the CEO was changed. Why was no closed scrutiny kept on the working of the bank? It could have been prevented if the government had been vigilant," said the Congress leader.

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While Finance Minister Nirmala Sitharaman and RBI governor Shaktikanta Das have assured the Yes Bank's depositors that their money is safe, Union Law and Justice Minister Ravi Shankar Prasad on Sunday said that the government has initiated strict action regarding the Yes Bank crisis, further alleging that the bad loans that have resulted in this situation of Yes Bank were given when the Congress party was in power at the Centre.

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As things stand, the State Bank of India (SBI) may invest in Yes Bank. SBI chairman Rajnish Kumar in a press conference assured SBI's commitment to invest in the stressed commercial lender. While Kumar did assure that SBI depositors will not be affected by the investment, he expressed that SBI would prefer holding its mandatory 26% stake investment and look for other co-investors for the remaining stake instead of picking up the entire 49%. 

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Yes Bank which has been facing a crisis as it accumulated many bad loans in 2018 by lending to corporate defaulters such as DHFL, Jet Airways and Cafe Coffee day, was put on a moratorium by RBI for a period of 30 days, capping its withdrawals at Rs 50,000. The RBI has also announced ‘Yes Bank Ltd. Reconstruction Scheme, 2020’ altering the authorised capital to Rs 5000 crores and 2400 equity shares standing at Rs 10 each. Moreover, SBI which leads the consortium of banks investing in the 'reconstructed bank' will not reduce its holding below 26% before the completion of three years.

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