Senior Congress leader and former Finance Minister P Chidambaram on Saturday raised doubts about the State Bank of India's (SBI) decision to help the ailing Yes Bank. Addressing a press conference hours after SBI's announcement, P Chidambaram said he is of the view that SBI is being commanded to rescue Yes Bank.
"I don't get a feeling that SBI is a volunteer in the rescue act (for Yes Bank). Just as LIC was not a volunteer in the IDBI Bank's rescue act. These are command performances," P Chidambaram claimed.
Calling the Yes Bank crisis a "fiasco", P Chidambaram said it is "only part of the BJP government's mismanagement of country's financial institutions".
"The best judge for any financial crisis is the market. Yesterday, the Sensex fell by 884 points. The price of SBI's share fell by Rs 18 and that of Yes Bank fell from Rs 36.8 to about Rs 16," Chidambaram said.
On Thursday, the RBI imposed a one month moratorium on capital-starved Yes Bank and capped the monthly withdrawal limit for depositors to Rs 50,000 per account. The RBI and the Finance Ministry have assured Yes Bank depositors that their money is safe, saying the RBI will "protect their interests".
On Saturday, India's largest lender, the State Bank of India (SBI), said its board has given an in-principal approval for the bank to buy up to 49 per cent stakes in Yes Bank. Addressing a press conference in Mumbai, SBI Chairperson Rajnish Kumar said the bank would be investing a minimum of Rs 2,400 crore in Yes Bank.
Reacting to SBI's announcement, P Chidambaram said, "The resolution plan proposed by SBI for Yes Bank is bizarre when bank's net worth is perhaps zero. It would be better for SBI to take over, on RBI's order, Yes Bank's loan book at Rs1 and to assure depositors that their money will be returned. Simultaneously, SBI should make every effort to recover as much as possible of the outstanding loans of Yes Bank."
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