Congress leader P Chidambaram attacked the BJP-led government at the Centre for the crisis in Yes Bank, India’s fifth-largest private lender, saying the government is living in ignorance.
“I understand FM has made a statement blaming the UPA. That’s normal for a government living in ignorance. Does the FM know the numbers that I have tweeted? If she does, will she please explain how the loan book jumped in five years from Rs 55,633 crore to Rs 2,41,499 crore?” Chidambaram, who was the finance minister during Congress-led UPA government, said on Twitter.
“Who knows, FM may blame the UPA for the miraculous jump between 2014 and 2019,” he said in his second tweet.
Yes Bank has been put under moratorium by the Reserve Bank of India (RBI) after it found “serious deterioration” in the financial position of the bank. The RBI has capped deposit withdrawals at the bank at Rs 50,000 per account for a month and superseded its board.
The bank will not be able to grant or renew any loan or advance, make any investment, incur any liability or agree to disburse any payment during the period.
The shocked customers of Yes Bank rushed to withdraw their money after the net banking and ATMs of the bank stopped functioning due to RBI order. Long queues were seen outside the branches of the bank and people were worried about not being able to withdraw not more than Rs 50,000.
RBI governor Shaktikanta Das tried to soothe the anxious depositors by saying that the central bank is working wiftly to end the crisis. Finance Minister Nirmala Sitharaman also spoke about the issue and said she is in regular touch of RBI. “The depositors need not panic, their money is safe,” Sitharaman said.
Shares of Yes Bank plunged as much as 85 per cent to wipe out more than $1 billion of market value, marking the biggest intra-day fall in an Indian blue-chip stock. By early afternoon, the stock was down 60 per cent after paring losses. The rout of Yes Bank sent the broader market and the banking index into a tailspin.
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 shadow banks entangled in a prolonged crunch in the local credit market. That erupted with a series of defaults at Infrastructure Leasing & Financial Services Ltd. in September 2018.
The seizure of Yes Bank is largest of the government moves to stem an erosion of confidence among investors due to the shadow bank crisis. The government took over IL&FS in 2018 in an effort to reassure creditors after the defaults. Yes Bank’s total exposure to shadow lenders and developers – both caught up in a funding crunch since late 2018 – was 11.5 per cent as of September, filings show.
