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Chidambaram calls Modi govt's YES Bank rescue plan 'bizarre'

Chidambaram targetted the NDA government saying the BJP-led government failed to detect the 35 percent per year jump in Yes Bank loans that led to the crisis

twitter-logoBusinessToday.In | March 7, 2020 | Updated 18:52 IST
Chidambaram calls Modi govt's YES Bank rescue plan 'bizarre'
Former Finance Minister P Chidambaram

Congress leader and former finance minister P Chidambaram at a press conference on Saturday called the government's plan to bailout Yes Bank "bizarre". He targetted the NDA government saying the BJP-led government failed to detect the 35 percent per year jump in Yes Bank loans that led to the crisis.

"The plan appears to be that SBI (State Bank of India) will invest Rs 2,450 crore to pick up a 49 percent 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," said the former Finance Minister.

Chidambaram said that he believes that SBI is being forced by the government to save Yes Bank. "I don't think SBI and LIC are doing this rescue out of their will, these are commands that are given to them. They are being forced into doing so," explained Chidambaram.

Nirmala Sitharam on Friday had lashed out against the Congress members who were criticising the government's restructuring plan for Yes Bank. Sitharamram had claimed that the Yes Bank crisis originated during the time the UPA government was in power. Sitharaman had made remarks against Chidambaram saying that he is a "self-appointed competent doctor". She even questioned the former FM's track record.

During the press conference on Saturday, Chidambaram replied to 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."

Chidambaram in his replies clearly put the blame for the Yes Bank crisis on the BJP government's shoulder. He questioned the government's oversight in allowing the outstanding loans of Yes Bank to go from Rs 55,633 crore in 2014 to Rs 1,32,263 crore in 2017. "A 100% jump in loan book immediately after demonetisation, the FM should answer about it. This is the period when I was not the FM. Yes Bank's total outstanding loan amount had reached Rs 2,41,499 by 2019. "The loan book was allowed to grow despite RBI and government supervision at a rate of 35 percent per year," 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?" said the Congress leader. "Why did nothing change when CEO was changed, when Yes bank reported its first-ever quarterly loss in Jan-March 2019?" added Chidambaram.

"The Yes Bank fiasco is only part of the mismanagement of the financial institutions under the watch of the BJP government," he added.

Yes Bank was placed under moratorium by RBI on Thursday. The RBI has a set the withdrawal amount at Rs 50,000 per account per month. As part of the restructuring scheme of the RBI, SBI would invest in Yes Bank and would own a 49% stake in the crisis-ridden bank.

Also Read: SBI studying YES Bank restructuring plan; will invest Rs 2,450 crore: Rajnish Kumar

Also Read: YES Bank Collapse: ED grills Rana Kapoor; raids continue on second day 

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