Updated: March 9, 2020 10:31:54 pm
RBI-appointed administrator Prashant Kumar said on Monday that the moratorium on Yes Bank could be lifted by Saturday, days after the RBI superseded the board of directors of the private sector lender for a period of 30 days “owing to serious deterioration in the financial position” of the bank. The RBI has also capped the deposit withdrawals at Rs 50,000 per depositor.
Prashant Kumar said the final approval from the Reserve Bank to the SBI-led resolution plan would result in Yes Bank coming out of the moratorium, PTI reported. He also made it clear that the lifting of the restrictions does not hinge on capital raising plan.
Meanwhile, a day after CBI registered an FIR against Yes Bank co-founder and promoter Rana Kapoor under charges of alleged criminal conspiracy and corruption, the investigating agency carried out searches at seven locations in connection with the alleged Yes Bank scam case.
CBI sleuths carried out operations at the residence and official premises of Kapoor in Mumbai. Kapoor is alleged to have received kickbacks through a Rs 600-crore loan from a non-banking financial company (NBFC), which is an associate company of Dewan Housing Finance Limited (DHFL), to DoIT Urban Ventures (India) Private Ltd, a company owned by Kapoor’s family, at a time when Yes Bank had loan exposure of Rs 3,700 crore to DHFL. Rana Kapoor was the MD and CEO of Yes Bank till January 2019.
Rana Kapoor’s wife, three daughters booked by CBI
In its FIR, the CBI has named five companies, seven individuals, including Kapoor’s wife and three daughters, and unidentified people. Besides Rana Kapoor, the agency has booked his wife Bindu, daughters Roshini, Raakhe and Radha. Kapil Wadhawan, promoter of Dewan Housing Finance Corporation Limited (DHFL) and Dheeraj Rajesh Kumar Wadhawan, Director of RKW Developers Private Limited, a company linked to DHFL have also been named as accused, PTI reported.
Companies DHFL, RKW Developers Private Limited, DoIt Urban Ventures controlled by the Kapoor family, RAB Enterprises (lndia) Private Limited in which Bindu Rana Kapoor was director and Morgan Credits Private Ltd in which Rana Kapoor’s daughters were directors are also named as accused.
Rana Kapoor sent to three-day ED custody
On Sunday, a Mumbai sessions court granted three-day custody of Kapoor to the ED. He will remain in custody till March 11. His daughter Roshni was also stopped from taking a flight to London as she was required to join the ED probe against her father. Roshni and her sister Radha are the directors of DoIT Urban Ventures (India) Private Ltd, the firm which received kickbacks worth Rs 600 crore from DHFL.
Meanwhile, Yes Bank depositors pulled out over Rs 18,000 crore between April and September last year with experts not ruling out another 10-20 per cent more withdrawals from October 2019 to February 2020.
A Gujarat-based industrial group is believed to have pulled out its funds from the bank a month ago. Tirumala Tirupati Devastanam Friday said it withdrew deposits of Rs 1,300 crore on maturity in October 2019. Vadodara Smart City Development Company, a special purpose vehicle controlled by the Vadodara Municipal Corporation (VMC) withdrew Rs 265 crore from the bank a day before the RBI stepped in last week to cap withdrawals last week.
Yes Bank stocks jump on SBI investment boost
Shares of Yes Bank on Monday zoomed over 30 per cent after SBI said it will pick up 49 per cent stake in the troubled private lender.
The scrip witnessed a sharp rise, spiking 29.63 per cent to Rs 21 on the BSE. On the NSE, it jumped 32.20 per cent to Rs 21.35. On the other hand, shares of SBI plunged over 6 per cent.
S&P Global Ratings said quick resolution of Yes Bank’s insolvency will keep India’s banking sector contagion at bay, but as credit markets tighten there could be a possibility of wider economic pain in the country.
Finance Minister Nirmala Sitharaman has said the RBI had been monitoring Yes Bank since 2017 and noticed governance issues and weak compliance besides wrong asset classification.
Sitharaman stated that the RBI advised a change within the Yes Bank management after finding risky credit decision. “Anil Ambani Group, Essel, DHFL, ILFS, Vodafone are some of the very stressed corporate whom Yes Bank lent,” she said.
The Finance Minister also said that the government has asked the central bank to look into what went wrong at Yes Bank and fix individual responsibilities.
What is the Yes Bank crisis?
On March 5, the Reserve Bank of India (RBI) imposed a moratorium on the bank, capping withdrawals at Rs 50,000 per account, and superseded the board of the private sector lender with immediate effect. The central bank has appointed former deputy managing director and CFO of SBI Prashant Kumar.
During this period, the bank will not be able to grant or renew any loan or advance, make any investment, incur any liability or agree to disburse any payment.
Why capping withdrawals from Yes Bank is a terrible idea
When RBI and Govt step in with the power of the SBI’s balance sheet behind them, depositors know there is nothing to fear. All depositors are assured. At this juncture, a cap on withdrawals is a big disservice to depositors. To reinforce the sentiment of safety, the RBI needs to do is keep the chests open, and not restrict access to money. Tell depositors that they can withdraw all that they want. This is what the government did when there was a panic in 2008 regarding a large, aggressive private bank.
Yes Bank was struggling to get capital infusion and saw a decline in total deposits by six per cent to Rs 2.09 lakh crore. As on March 31, 2019, the deposits of top 20 depositors aggregated to Rs 24,673 crore, representing 10.84 per cent of the total deposit base.
RBI Governor Shaktikanta Das has assured Yes Bank customers of “swift” action and a scheme “very shortly”. “The resolution (to Yes Bank) will be done very swiftly, it will be done very fast… 30 days which we have given is the outer limit. You will see very swift action from RBI,” Das said.
As part of its reconstruction scheme, the SBI on March 7 announced it will pick up a 49 per cent stake in Yes Bank for Rs 2,450 crore and clarified that all the deposits and liabilities of the reconstructed bank will continue in the “same manner”.
The RBI has also announced its decision to permanently write down the Additional Tier 1 (AT1) capital raised by Yes Bank. This puts the entire Rs 10,800 crore worth of AT1 at risk, which includes mutual funds and pension funds of depositors.
Opposition slams Centre on Yes Bank crisis
The Congress has described the Yes Bank “fiasco” as a part of the “mismanagement of financial institutions” under the BJP-led government’s watch.
Former Finance Minister P Chidambaram asked why nobody in the RBI or the government detected the spike in Yes Bank’s loan book by around 35 per cent per year in the last six years, and demanded a thorough investigation.
His party colleague Manish Tewari, a member of the Parliamentary Standing Committee on Finance, wrote to the committee chairman, Jayant Sinha, asking him to “convene an urgent meeting” of the panel and summon officials from RBI, Department of Financial Services, and Yes Bank to “explain the collapse”. He said the “collapse of Yes Bank is not a red herring, but another sign of our collapsing economy.”
This is why PhonePe was down
Following the Yes Bank fiasco, digital payments were impacted as PhonePe, which depends on the cash-strapped lender for its transactions, could not operate. Yes Bank’s own net banking facilities have not been operational since March 5 evening.
PhonePe, one of the country’s largest digital payment platforms, is dependent on Yes Bank to process its transactions.
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