oppn parties Yes Bank's Troubles Points To Systemic And Regulatory Failures
OPINIONS : Strongly Expressed

January 29, 2023

People Are Talking About

Welcoming 2023

News Snippets

  • RBI governor Shaktikanta Das says that inflation is easing and the current account deficit is manageable
  • Adani Enterprises FPO sees just 1% subscription on the first day as the stock goes down to Rs 2762, much below the price band of Rs 3112-3276
  • Stocks bleed on Friday post the Hindenburg report as Adani stocks are hammered: Sensex loses 874 points to 59330 and Nifty 287 points to 17604
  • Rs 263cr TDS scam detected by the I-T department. A mid-level officer was the kingpin and had amassed huge wealth
  • Women's U-19 World Cup -India reaches the final by beating New Zealand by 8 wickets
  • New Zealand beat India by 21 runs in the first T20 as spinners choke Indian batters
  • Sania Mirza and Rohan Bopanna lose in the Australian Open finals
  • Sania Mirza and Rohan Bopanna lose in the final of the Australian Open
  • India to play New Zealand in the first T20 of the three-match series in Ranchi today
  • RBI has proposed special purpose vehicles (SPEs) mechanism to sell bad loans to interested investors via securitization
  • JD(U) decides not to attend the Bharat Jodo Yatra finale in Srinagar
  • Hindenburg defends its report on the Adani group, dares Gautam Adani to sue it in the US
  • BJP's talks with Tipra Motha in Tripura make no headway but the party is confident of winning in the ensuing elections
  • Pathan is a super hit at the box office: Rs 57cr in India (worldwide Rs 106cr) on Day 1 and then Rs 70cr on Day 2 which was Republic Day holiday
  • Centre tells Delhi HC that Covid vaccines can't be mixed when taking the second dose
A Mirage2000 and A Sukhoi 30 of the Indian Air Force on a training mission crashed separately, in Bharatpur in Rajasthan and Morena in Madhya Pradesh, killing one pilot
oppn parties
Yes Bank's Troubles Points To Systemic And Regulatory Failures

By A Special Correspondent
First publised on 2020-03-09 17:14:08

Yes Bank has become the latest financial institution to go under. Although the bank was in trouble for a long time and the promoter Rana Kapoor had been removed from the board, all efforts to find a buyer for the bank had been scuttled, some at the very last minute. People in the know say that Kapoor was pulling the strings from London and was instrumental in changing the minds of suitors. They say that he was still nursing the hope that the government would allow him back on the saddle of "his baby", as he calls the bank.

The government, it seems, played on his hopes and lured him back to India. Maybe the way the government handled the Yes Bank issue it managed to nab Kapoor and will punish him for the alleged wrongdoings, but in the process, it has penalized lakhs of ordinary customers of the bank. The moratorium of withdrawals up to Rs 50000 a month is a stiff penalty for the customers of an upmarket bank like the Yes Bank, many of whom had issued EMI cheques worth much more than that every month from their accounts in the bank and had substantial deposits that are now frozen. It has also brought the operations of the digital wallet PhonePe (which was entirely dependent on Yes Bank for its transactions) to a standstill, inconveniencing crores of users and discrediting the UPI network, of which PhonePe controlled a major share.

The culprit, in this case, is the RBI. Despite having known that Yes Bank was on the verge of collapse, the regulator just removed Kapoor two years ago and put its nominee on the bank's board in May last year. That was nearly ten months ago.  But after that, despite having access to all papers and analyses, the RBI did little else apart from trying to find a buyer for the bank. The result of that is now the government will have to bail it out with the SBI taking the lead. In any case, the RBI and the government must not delay whatever they have planned as each passing day is eroding investor confidence and adding to the troubles of the bank's depositors.