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 the state-run bank to take over the stressed lender Yes Bank. He added that SBI must also make every effort to recover as much as possible of the outstanding loans of Yes Bank. Chidambaram has been slamming the Modi government for allowing the 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 the day, SBI chairman Rajnish Kumar addressed a press conference assuring the state-run bank'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. Talking about SBI's potential investment, he said that while the bank may not pick the 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 not have any conflict of interest with respect to the two banks. Clarifying that it was not SBI's philosophy to poach any other entity's clients, he said that SBI will not be involved in Yes Bank's day-to-day activities. Moreover, when asked if the recent ED raids on Yes Bank founder and former MD Rana Kapoor's residence will affect the brand image of the bank, Kumar said that the 'individual will pay for his wrongs, but the entity must not suffer'.
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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. 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. Currently, Enforcement Directorate is raiding founder Rana Kapoor's residence after booking a money laundering case. The ED is probing into the 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