Who to blame for Yes Bank crisis? Former RBI chief Bimal Jalan tells whom to hold responsible

Former Reserve Bank of India Governor Bimal Jalan has said that the crisis at Yes Bank was its own making, and not that of the central bank or the Ministry of Finance.

Former Reserve Bank of India Governor Bimal Jalan has said that the crisis at Yes Bank was its own making, and not that of the central bank or the Ministry of Finance. In an interview with news agency PTI, Bimal Jalan, who served as the head of the Reserve Bank of India for a period of six years, said, “I don’t think we should blame RBI or the finance ministry for the Yes Bank crisis. For Yes Bank crisis, Yes Bank is responsible.” Earlier, Raghuram Rajan, another former RBI governor had said that it was imperative upon the government to get the Yes Bank rescue plan right.

Bimal Jalan’s comments come just a few days ahead of the date when the new board of Yes Bank is due to take charge of the bank. RBI-appointed Yes Bank administrator, Prashant Kumar will take over as the new Managing Director and CEO of the lender on March 26. “The only point that you can make is that the problems in Yes Bank were already visible 2-3 years ago and some steps could have been taken earlier,” Jalan added.

Yes Bank’s board was superseded on March 5 by the RBI whilst placing the cash-starved bank under a moratorium and limiting withdrawals of customers to Rs 50,000 under the period. In an effort to help the troubled bank stay afloat, India’s largest public sector bank State Bank of India along with leading private sector banks infused Rs 10,000 crore picking up 1,000 crore equity shares. The private sector investors include ICICI Bank, HDFC, Axis Bank, Bandhan Bank, Federal Bank, Kotak Mahindra Bank and IDFC Bank.

Along with the Rs 10,000 crore infused via private lenders, Yes Bank has been given a Rs 60,000 crore line of credit by the RBI, only to be used as the last resort. The private lender is also aiming to raise Rs 20,000 crore via certificate of deposits. The new board of Yes Bank will consist of former deputy governor R Gandhi along with SP Jain Institute of Management and Research associate professor Ananth Narayan, Mahesh Krishnamurthy and Atul Bheda have been appointed by the government as non-executive directors. On the behalf of SBI its deputy managing directors J Swaminathan and Partha Pratim Sengupta will take seat on the Yes Bank board.