Yes Bank fiasco caused by 'mismanagement' of financial institutions under BJP govt: P Chidambaram

The Congress on Saturday termed as “bizarre” the government's plan to have SBI invest Rs 2,450 crore to revive Yes Bank and demanded a thorough probe to ascertain why “alarm bells” did not ring when the bank reported its quarterly loss in January-March last year.

Addressing a press conference here, former finance minister P Chidambaram described the lending spree as Yes Bank as “buccaneering” and wondered how no one at the RBI noticed a 35% jump in the loan book of the private bank.

Dismissing the Yes Bank rescue plan as “bizarre”, Chidambaram suggested that the SBI pick up the loan book of the private bank at a token Rs 1 and assure all depositors that their money was safe and will be returned.

“The plan appears to be that SBI will invest Rs 2,450 crore to pick up a 49% stake in the restructured capital of the bank at a price of not less than Rs 10 per share, face value Rs 2. This is bizarre when the net worth of the bank is zero,” he said.

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On Friday, RBI had unveiled a reconstruction scheme for Yes Bank and said that SBI had expressed willingness to be part of it. Hours before RBI came out with the plan, SBI Chairman Rajnish Kumar had a meeting with Finance Minister Nirmala Sitharaman.

“I don't get the impression that SBI was a volunteer in the rescue act. Just as LIC wasn't for IDBI (Bank). These are command performances,” Chidambaram said.

The Congress leader claimed that the Yes Bank “fiasco” was caused by mismanagement of financial institutions under the BJP government and called for a thorough probe to fix accountability.

Chidambaram fired a series of questions at the government demanding to know who had authorised new loans after March 2014; whether the central bank was unaware that Yes Bank was on a loan giving spree, why nothing changed after replacing the bank CEO and appointment of a former deputy governor of RBI was named to the board of the private bank.