Siding with the RBI, former Finance Minister P Chidambaram on Friday, assured that there was no need for depositors to panic amid the Yes Bank moratorium. He said that they (Congress) were only questioning where the regulatory failure had happened. RBI governor Shaktikanta Das had earlier in the day assured that the RBI would put a scheme to revive Yes Bank in less than 30 days, stating 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.
"What else will RBI say? Obviously, there is no need to panic and nobody is suggesting that. All we are asking are questions - Where is the regulatory failure?," he said to reporters outside the Lok Sabha.
Slamming the BJP government for the Yes Bank crisis and its continued silence over the PMC Bank crisis, he added, "The government keeps absolutely silent even as the PMC Bank depositors agitate daily on the streets of Mumbai before the RBI. Let us see what the government, stakeholders, and depositors of Yes Bank do. I think they are as worried as the depositors of PMC bank and let us see what unfolds." Currently, the Sena-NCP-Congress government are in power in Maharashtra and is mulling on merging scam-hit PMC and MSC bank.
BJP has been in power for six years. Their ability to govern and regulate financial institutions stands exposed— P. Chidambaram (@PChidambaram_IN) March 6, 2020
First, it was PMC Bank. Now it is YES Bank. Is the government concerned at all? Can it shirk its responsibility?
Is there a third bank in the line?
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 in 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. Yes Bank started facing a crisis as it accumulated many bad loans and RBI refused to extend the term of founder Rana Kapoor as chief executive in 2018 and the bank was unable to come up with a concrete investment plan.