Congress leader P Chidambaram on Saturday said the government’s bailout plan for the crisis-hit Yes Bank was “bizarre”, targeting the BJP-led central government over a massive oversight failure that allowed a 35 per cent per year jump in its loan book since 2014.
“The plan appears to be that SBI (State Bank of India) will invest Rs 2,450 crore to pick up a 49 per cent stake in the restructured capital of the bank at a price of not less than Rs 10 per share, face value Rs 2. This is bizarre when the net worth of the bank is zero,” Mr Chidambaram said.
“I don’t get the impression that SBI was a volunteer in the rescue act. Just as LIC (Life Insurance Corporation) wasn’t for IDBI [Bank]. These are command performances,” the former finance minister added.
Outlining a restructuring plan for Yes Bank after restrictions imposed by the RBI, Finance Minister Nirmala Sitharaman on Friday had lashed out at opposition criticism, claiming that the crisis originated on Congress watch. She also mocked Mr Chidambaram as a “self-appointed competent doctor” and questioned his track record.
On Saturday, Mr Chidambaram countered her, saying, “Sometimes when I listen to the Finance Minister, I feel the UPA (Congress-led United Progressive Alliance) is still in power, I am still the finance minister and she is the opposition.”
Laying the blame squarely on the BJP-led government at the centre for a stunning jump in Yes Bank’s outstanding loans from Rs 55,633 crore in 2014 to Rs 2,41,499 crore in 2019, the Congress leader said, “Obviously if you mismanage, you will lurch from one crisis to another.”
“The loan book was allowed to grow despite RBI and government supervision at a rate of 35 per cent per year. Please also notice the spike in 2016-17 and 2017-18 – the two years immediately following demonetisation,” Mr Chidambaram added.
“Who authorised the grant of new loans after March 2014? Were the RBI and the government not aware that Yes Bank was in a loan-giving spree? It was not banking but buccaneering. Did no one at the government or the RBI read the balance sheet of the bank at the end of every year? Why did the alarm bells not ring when Yes Bank reported its first quarterly loss in March 2019?” the Congress leader said.
“The Yes Bank fiasco is only part of the mismanagement of the financial institutions under the watch of the BJP government,” he added.
After months of steady deterioration in the financial position, Yes Bank was placed under a moratorium on Thursday, with the Reserve Bank of India (RBI) capping deposit withdrawals at the bank at Rs 50,000 per account for a month and superseding its board.
The move triggered a bloodbath in the stock markets and sent customers scrambling to ATMs to withdraw whatever little money they could get their hands on.