As panicky depositors rushed to withdraw money from Yes Bank whose control was seized by the RBI in a dramatic late-night move, Finance Minister Nirmala Sitharaman on Friday assured depositors that their money is safe and said the RBI has been asked to assess reasons for the crisis and fix responsibilities.
The Reserve Bank of India (RBI) on Thursday evening capped withdrawals at Rs 50,000 for the next one month and imposed strict limits on operations at the country's fourth-largest private lender that faced "regular outflow of liquidity" after an effort to raise new capital failed.
"I am in continuous interaction with the RBI. The RBI is fully seized of the matter and has assured they will give a quick resolution," Sitharaman said here.
She said no depositor will lose his or her money and insisted that the immediate priority is to ensure Yes Bank customers are able to withdraw money within the stipulated cap.
"I want to assure every depositor that their money shall be safe. Their monies are safe," she said. "I am constantly in contact with the RBI and the steps that are taken are taken in the interest of depositors, banks and economy. We are fully seized of the development."
Addressing a press conference here, the minister said the RBI had been since 2017 closely scrutinising Yes Bank where "it noticed governance issues of serious concern, weak compliance, and wrong asset classification together with risky credit decisions".
Upon getting clear indications, the RBI took concrete steps including changing the CEO in 2018 and asking promoter to let go of their shares, she said adding promoters sold down their shares in September last year.
Investigating agencies also saw "malpractices of some of their chairman and top-order people," she said without elaborating.
Sitharaman said the failure of attempts to get new equity infusion and the resignation of the chairman of the audit committee of the bank in January this year led to things getting serious.
"I have asked the RBI now to go into assessing what actually has caused this difficulty in Yes Bank and also clearly identify the role played by various individuals in the problems -- in creating and not so comprehensively addressing the problem," she said.
The RBI has also been asked to report on the adequacy of extant regulatory and supervisory norms. "And if found inadequate where and why. I have asked them to report this," she said.
The minister said the RBI has also been asked to act so that the due process of law takes its course with a sense of urgency.
"The government is committed to ensure the depositors' interest is completely safeguarded and also RBI to ensure that due process of law is set to roll with a sense of urgency so that we should find out that who led to this problem of this size and magnitude in Yes Bank," she said.
The restructuring scheme, announced by the RBI for induction of a new partner in the bank, will be fully effective within the moratorium period of 30 days, she said. "SBI has expressed willingness to invest in Yes Bank and invest in equity in the restructuring process."
Earlier in the day, State Bank of India (SBI) Chairman Rajnish Kumar met her.
On Thursday, the SBI board gave its "in-principle" approval to exploring investment opportunities in Yes Bank.
"So I repeat, the depositors can be assured that their money is safe," she said.
Soon after the RBI takeover, depositors thronged Yes Bank ATMs to withdraw money and the police had to be deployed in some places to control the crowds.
Yes Bank has 1,000 branches across the country.
Refusing to elaborate on her meeting with the SBI chairman, the minister said that "was on a completely different matter".
"RBI governor has given me assurance that there will be an appropriate resolution soon. No depositor will lose (money)," she said. "Reserve Bank has taken cognizance of the problem."
The central bank, she said, has gone through the "process over and over again to find out an amicable solution".
"And that has been over the last couple of months. So it is not as if they have come in suddenly now. We have been monitoring the situation," she said adding the RBI has appointed an administrator who previously was with the SBI.
"Both the RBI and the government are looking at this with all the details before them, not just today. I have personally monitored the situation over the last couple of months with the RBI. Therefore we have taken a course which will be in everybody's interest," she added.
Yes Bank had been seeking new capital since last year to bolster its ratios and quell questions about its stability due to its exposure to the non-banking finance industry entangled in a prolonged crunch in the local credit market.
The SBI chairman said the resolution to the Yes Bank crisis will come "very shortly".
"This is not a sectoral problem. It is a bank-specific problem," he said. "The RBI will take all steps to ensure financial stability."
On SBI picking up a stake in Yes Bank, he said the lender already has an in-principle approval for doing so.
"If SBI has to pick up a stake in Yes Bank, we have an in-principle approval for that," he said.
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