Finance Minister Nirmala Sitharaman addressed the YES Bank saga in a televised press conference on March 6. She explicitly said that genuine efforts were made by the bank to get investors on board that the private lender had been scouting for some time now.

However, when the bank failed to get equity, Reserve Bank of India (RBI) imposed a moratorium on the Mumbai-based lender to protect depositors. “Attempts to get equity into YES Bank did not materialise, Sitharaman said, citing the RBI action against the Rana Kapoor co-founded lender.

She said that the RBI had been monitoring YES Bank since 2017 and noticed governance issues, weak compliance and wrong asset classification. “RBI sought a change in Yes Bank management after finding risky credit decision. Investigating agencies too found irregularities at Yes Bank.

She added that the finance ministry had asked RBI to go into assessing what went wrong at YES Bank and identify the role played by various individuals at the top level.

She pointed out that YES Bank had been under the same management since 2004 and compliance issues were raised in the past. This prompted the RBI to take measures and the central bank has come up with a draft scheme for reconstruction of the bank.

Speaking about employees, the FM said, "All employees of the reconstructed bank will continue in service with the same remuneration, terms and conditions of service for at least a year.

However, she added that the Board of Directors of the reconstructed bank will have the freedom to discontinue the services of the Key Managerial Personnel (KMPs) at any point of time.

RBI had imposed a moratorium on debt-ridden YES Bank on March 5, and had limited withdrawal by depositors up to Rs 50,000 until April 3.

Earlier, she had assured depositors that their money was safe and added, "I am in continuous interaction with RBI. RBI has assured that they will find a quick resolution. I want to also assure every depositor that their money shall be safe. Steps that are taken now are in the interest of depositors, bank and the economy. There are doubts among depositors but I assure their money is safe."

First Published:Mar 6, 2020 5:32 PM IST