Congress leaders P Chidambaram and Randeep Surjewala at the AICC headquarters in New Delhi on Saturday. (Express Photo by Tashi Tobgyal)
Stepping up its attack, the Congress on Saturday said the Yes Bank “fiasco” is only part of the “mismanagement of financial institutions” under the BJP-led government’s watch.
Former Finance Minister P Chidambaram asked why nobody in the Reserve Bank of India or the government detected the spike in Yes Bank’s loan book by around 35 per cent per year in the last six years, and demanded a thorough investigation.
His party colleague Manish Tewari, a member of the Parliamentary Standing Committee on Finance, wrote to the committee chairman, Jayant Sinha, asking him to “convene an urgent meeting” of the panel and summon officials from RBI, Department of Financial Services, and Yes Bank to “explain the collapse”. He said the “collapse of Yes Bank is not a red herring, but another sign of our collapsing economy.”
Addressing the media, Chidambaram termed the revival plan announced by the RBI as “bizarre”. He said the plan “appears to be that SBI will invest Rs 2,450 crore to pick up a 49 per cent stake in the restructured capital of the bank at a price not less than Rs 10 per share (face value Rs 2). This is bizarre, when the net worth of the bank is perhaps zero… I don’t get an impression that the SBI is a volunteer in the rescue act. Just as LIC was not a volunteer in the IDBI Bank rescue act. These are command performances.”
The Congress leader said: “It is completely beyond my comprehension how no one in the RBI or the government seems to have read the balance sheet. If you had simply read the balance sheet, you would know the outstanding loans are jumping at the rate of 35 per cent. And why did somebody not stop it…sometime, say in 2015 or 2016? This is a matter that must be thoroughly inquired into. How is it that no official of the department of financial services, RBI, no auditor noticed the jump in the loan book at 35 per cent per year?”
The loan books of the entire banking system, on the other hand, grew only at about 9.5-10 per cent per year from 2014 to 2019, he said. “It is difficult to understand how in a matter of two years — between March 2016 and March 2018 — it rises by 100 per cent-plus. From Rs 98,000 crore to 2,03,000 crore — it is a 100-per cent jump. I don’t think there is any bank in India which doubled its loan book in 24 months,” he said.
“The RBI must come and tell us what are the irregularities and acts of misfeasance and malfeasance that appear prima facie… from its study of the books of Yes Bank. The board must look into it first…. The attempt should not be to brush everything under the carpet. Accountability has to be fixed,” he said.
Chidambaram said the size of gross NPAs may be understated and added that the number will rise once the moratorium on declaring stressed assets of SMEs is lifted on March 31, 2020.