New Delhi: Finance Minister Nirmala Sitharaman on Friday said the government has asked the Reserve Bank to look into what went wrong at Yes Bank and fix individual responsibilities.
Addressing a press conference after the RBI superseded the board of Yes Bank and placed withdrawal restrictions, she said the bank was being monitored since 2017 and developments relating to it were being monitored on a day-to-day basis.
FM Nirmala Sitharaman speaking on Yes Bank Issue Since 2017, the central bank noticed governance issues and weak regulatory compliance at Yes Bank, besides wrong asset classification and risky credit decisions, she said.
On finding risky credit decisions, the RBI advised change in management, she said.
These decisions were taken in the interest of the bank's health, and a new CEO was appointed in September 2018 and cleaning up of bank started, she said adding that investigative agencies too had found irregularities.
Read more:Live Updates: Salary, employment safe for one year, FM says on Yes Bank
She said the RBI has been asked to assess the causes of problems and identify the role played by individuals.
The government, she said, wants the RBI to ensure that due process of law is followed with a sense of urgency.
The restructuring scheme will be fully effective within 30 days, she said adding that State Bank of India has expressed willingness to invest in Yes Bank.
The Finance Minister also said that employment and salary of Yes Bank employees has been assured for one year.
She said Anil Ambani Group, Essel, ILFS, DHFL and Vodafone were among the stressed corporates Yes Bank had exposure to.
Finance Minister retorted back at senior Congress leader and former finance P Chidambaram saying United Western Bank collapsed in 2006 under the "self-appointed competent doctors."
"We are ensuring customers interest are protected," she said. "We can assure all depositors that their money is safe."
"I am closely monitoring every institution which requires that kind of monitoring along with RBI," she added.
Important points from the Finance Minister's briefing:
- In terms of section 45 of the Banking Regulation Act, 1949 (10 of 1949), during the period of moratorium the Reserve Bank of India may, if so considered necessary in public interest or in the interest of the depositors or to secure the management of the banking company, frame a scheme of reconstruction or amalgamation of the concerned banking company
- State Bank of India has expressed its willingness to make investment in Yes Bank Ltd. and participate in its reconstruction scheme
- Authorised Capital shall stand altered to Rs.50,00,00,00,000 (Rupees Five thousand crore only) and number of equity shares will stand altered to 24,00,00,00,000 ( two thousand four hundred crore only) of Rs.2/- (Rupees Two only) each aggregating to Rs.48,00,00,00,000 (Rupees Four thousand eight hundred crore only)
- From the Appointed date, the office of the Administrator of Yes Bank Ltd. appointed by the Reserve Bank shall stand vacated, and a new Board, shall stand constituted
- The investor bank shall have two nominee directors appointed on the Board of the Reconstructed Bank
- Reserve Bank of India may appoint Additional Directors in exercise of the powers conferred by sub-section (1) of Section 36AB of the Banking Regulation Act, 1949
- All the employees of the Reconstructed bank shall continue in its service with the same remuneration and on the same terms and conditions of service (T&C), including terms of determination of service and retirement, as were applicable to such employees immediately before the Appointed date, at least for a period of one year.
(PTI Report)
