Finance Minister Nirmala Sitharaman on Friday said the government has asked the Reserve Bank to look into what went wrong at Yes Bank and fix individual responsibilities.
Addressing a press conference after the RBI superseded the board of Yes Bank and placed withdrawal restrictions, she said the bank was being monitored since 2017 and developments relating to it were being monitored on a day-to-day basis.
Since 2017, the central bank noticed governance issues and weak regulatory compliance at Yes Bank, besides wrong asset classification and risky credit decisions, she said.
On finding risky credit decisions, the RBI advised a change in management, she said.
These decisions were taken in the interest of the bank's health, and a new CEO was appointed in September 2018 and cleaning up of bank started, she said adding that investigative agencies too had found irregularities.
She said Anil Ambani Group, Essel, ILFS, DHFL and Vodafone were among the stressed corporates Yes Bank had exposure to.
Finance Minister retorted back at senior Congress leader and former finance P Chidambaram saying United Western Bank collapsed in 2006 under the "self-appointed competent doctors."
Earlier in the day, Sitharaman assured cash-starved Yes Bank depositors that their money is safe and the RBI is working on an early resolution of the issue.
“I want to assure every depositor that their money shall be safe. Their monies are safe,” Sitharaman told reporters here.
She said the steps taken are in the interest of depositors, banks and the economy.
“We are fully of seized of the development. RBI governor has assured me that there will be no loss to any depositor,” she added.
Yes 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.
Sitharaman insisted the immediate priority to ensure Yes Bank customers are able to withdraw money within Rs 50,000 limit.
For the next month, Yes Bank will be led by the RBI-appointed administrator Prashant Kumar, an ex-chief financial officer of SBI.
The board of country's largest lender State Bank of India on Thursday gave an "in-principle" approval to invest in the capital-starved Yes Bank.
Yes Bank has been struggling to execute a capital raising plan for the last six months. Its core equity tier-I ratio had slipped to 8.7 per cent as of September.
The bank had also delayed its December quarter results.
