Published 18:08 IST, March 7th 2020
Chidambaram contradicts RBI guv & SBI chief; advises 'SBI should take over Yes Bank'
Contradicting RBI and SBI chief, former Finance Minister P Chidambaram, on Saturday, advised the state-run bank to take over the stressed lender Yes Bank
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Contradicting RBI and SBI chief, former Finance Minister P Chidambaram, on Saturday, advised state-run bank to take over stressed lender Yes Bank. He added that SBI must also make every effort to recover as much as possible of outstanding loans of Yes Bank. Chidambaram has been slamming Modi government for allowing accumulation of bad loans by Yes bank leading to its current conundrum.
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Chidambaram contradicts SBI-RBI
SBI chairman Press Conference
Earlier in day, SBI chairman Rajnish Kumar addressed a press conference assuring state-run bank's commitment to invest in stressed commercial lender. While Kumar did assure that SBI depositors will t be affected by investment, he expressed that SBI would prefer holding its mandatory 26% stake investment and look for or co-investors for remaining stake. Talking about SBI's potential investment, he said that while bank may t pick entire 49%, it will invest a minimum of 26% state - attune to Rs 5200 crores.
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Ruling out any merger between SBI and Yes Bank, he said that SBI will t have any conflict of interest with respect to two banks. Clarifying that it was t SBI's philosophy to poach any or entity's clients, he said that SBI will t be involved in Yes Bank's day-to-day activities. Moreover, when asked if recent ED raids on Yes Bank founder and former MD Rana Kapoor's residence will affect brand im of bank, Kumar said that 'individual will pay for his wrongs, but entity must t suffer'.
Yes Bank crisis
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. RBI has also anunced ‘Yes Bank Ltd. Reconstruction Scheme, 2020’ altering authorised capital to Rs 5000 crores and 2400 equity shares standing at Rs 10 each. Moreover, SBI which leads consortium of banks investing in 'reconstructed bank' will t reduce its holding below 26% before completion of three years. Currently, Enforcement Directorate is raiding founder Rana Kapoor's residence after booking a money laundering case. ED is probing into loans offered by Yes Bank to DHFL which has been booked for siphoning funds close to Rs 13000 crores allegedly through 80 shell companies.
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18:08 IST, March 7th 2020