Yes Bank Crisis: FM assures jittery depositors; blames UPA for the crisis in banking sector

In a press conference held in capital New Delhi, Nirmala Sitharaman said that the RBI will conduct a thorough probe in the functioning of the bank to fix the responsibility of the individuals.

New Delhi: Finance Minister Nirmala Sitharaman on Friday came down heavily on the previous UPA government for the current crisis in the banking sector, including the Yes Bank, She said the bank had high exposure to some very stressed groups such as Anil Ambani Group, Essel Group, DHFL, IL&FS and Vodafone before NDA government came in power in May 2014.

She also assured the nervous depositors, who have thronged Yes Bank ATMs and branches across the country, that their money was safe and the bank’s liabilities will be honored.

This is the third major crisis in the banking sector during Finance Minister Nirmala Sitharaman’s tenure and the Yes Bank is by far the biggest bank which has faced restrictions on its operations from the banking sector regulator Reserve Bank of India.

In September 2019, RBI had imposed restrictions on withdrawal from Punjab & Maharashtra Cooperative Bank after it detected irregularities in its operations. It led to widespread panic among its depositors in the state of Maharashtra and resulted in death of several depositors.

In January this year, the RBI imposed restrictions on Bengaluru Bank, which gave a clear indication of the deepening crisis in the country’s banking sector.

In a press conference held in capital New Delhi, Nirmala Sitharaman said that the RBI will conduct a thorough probe in the functioning of the bank to fix the responsibility of the individuals.

“I have asked the RBI to find out and assess as to exactly what has caused these difficulties for the Yes Bank,” said the finance minister, adding that the RBI will also clearly identify the roles played by various individuals in creating the problems and not so comprehensively addressing the problem.

Nirmala Sitharman said the strategy of Prime Minister Modi’s government in dealing with the stressed banks is different from the strategy adopted by the previous UPA government.

She blamed the previous UPA government for merging three banks that collapsed during Dr Manmohan Singh’s tenure and then not taking any action against the people responsible for causing the crisis.

She blamed the previous UPA government for not taking any action against those individuals who were responsible for causing the collapse of Global Trust Bank (GTB), United Western Bank (UWB) and Ganesh Bank of Kurundwad (GBK) during former Prime Minister Manmohan Singh’s tenure.

“We are ensuring that customer’s interests are intact. We are ensuring that depositors interests are protected and their money is safe,” said finance minister Nirmala Sitharaman.

She also said that the RBI will complete the restructuring of Yes Bank within one month.

(Article by Senior Journalist Krishnanand Tripathi)