March 10, 2020 1:37:40 am
In a letter to Prime Minister Narendra Modi and Reserve Bank Governor Shaktikanta Das on Monday, IAS officer Ashok Khemka raised several objections to the draft reconstruction scheme for revival of Yes Bank, arguing that State Bank of India (SBI) is providing an “unfair public subsidy” to existing owners of the private lender using the wealth of SBI shareholders.
Calling the protection of existing common equity Tier I capital a “scam”, Khemka said the total capital of Yes Bank should be written down permanently, before bringing in public money in any form. “Yes Bank, like IL&FS, DHFL, PMC, is not a case of genuine business loss. The losses are due to fraud by its promoters, directors, management and overlooked by regulators, auditors, credit rating agencies, trustees and other statutory intermediaries,” he said, calling for action against such entities.
He said licences of auditors, credit rating agencies and trustees responsible must be suspended or cancelled. “Promoters committing fraud must be declared individually bankrupt and their personal wealth seized to repay creditors and depositors,” the bureaucrat suggested.
Last Friday, the Reserve Bank of India unveiled a reconstruction scheme under which SBI would be acquiring a 49 per cent equity stake in the Yes Bank, pumping in around Rs 10,000 crore in the troubled lender. The reconstruction plan also includes permanently writing down the Additional Tier 1 capital of Rs 10,800 crore raised by Yes Bank.
The RBI, which gave time till Monday for public comments on the draft plan, is hopeful of finalising the reconstruction plan for the private bank by the week’s end.
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