Published 20:20 IST, March 7th 2020
'Yes Bank crisis is an episode of the worst example of crony capitalism,' says CPI-(M)
Amidst the ongoing Yes Bank crisis, CPI-M slammed the Reserve Bank of India for not intervening on time and also spoke about SBI buying Yes Bank's stake
The Communist Party of India (Marxist) on Saturday reacted to the 'fall' of Yes Bank and stated that its "collapse" has raised many questions about the functioning regarding the functioning of private banks and the failure of Reserve Bank of India to intervene in time. The party called the bank's crisis an episode of "the worst example of crony capitalism".
The CPI-M politburo issued a statement and said that the loan account of the bank surprisingly increased from Rs 55,633 crore in March 2014 to Rs 2,41,999 crore in March 2019 during the tenure of the previous tenure of the BJP government.
"The bank was saddled with huge loans given to corporates favoured by the ruling regime. Some of these corporate debtors like Anil Ambani were backed to the hilt by the Modi government, despite their well-recorded precarious financial health," the party alleged.
The party also demanded the RBI to annul the limit of withdrawal set at Rs 50,000 for the bank depositors. "shenanigans indulged in by the promoter and the board of the bank was known for quite some time, the RBI did not act in time thereby jeopardizing the interests of the depositors," the statement said.
"The destructive influence of the current regime based on corporate cronyism on the Indian economy can no longer remain concealed," the party added.
Talking about the State Bank of India being made to buy 49 per cent state in the bank, CPI-M stated that it is very crucial of Yes Bank transforming into a state-owned enterprise.
"It cannot become a case of privatisation of profits and nationalisation of losses. Safeguarding the interests of the depositors must be paramount," the party said.
RBI imposes moratorium on Yes Bank
On March 5, the RBI imposed a moratorium on Yes Bank, stressing that the bank's financial capability has undergone a steady decline largely due to the inability of the bank to raise capital. RBI superseded its Board of Directors and appointed former Chief Financial Officer of SBI Prashant Kumar as its administrator for the meantime.
The withdrawals for customers have been capped at Rs 50,000. However, an exception can be made on the grounds of a medical emergency, higher education costs, marriage expenses, and unavoidable emergency. The RBI has cited Yes Bank's “inability to raise capital to address potential loan losses” and “serious governance issues” as some of the reasons for taking action. The RBI on Friday unveiled a draft reconstruction scheme of Yes Bank in the public domain. Moreover, the RBI has invited suggestions and comments from the members of the public until March 9, 2020.
(With inputs from ANI)
Updated 20:20 IST, March 7th 2020