Finance Minister Press Conference: Will Not Let Any Institution Fall Off A Cliff, Says Nirmala Sitharaman
Catch live updates from Nirmala Sitharman’s press conference here.
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Finance Minister Reassures Yes Bank Depositors
Finance Minister Nirmala Sitharman today said that the government will not let any financial institution collapse as she announced the Reserve Bank of India's restructuring plan for embattled Yes Bank Ltd.
“As I have repeatedly said, I will not allow for any institution to fall off a cliff,” Sitharaman said in a press conference. “We can assure all depositors that their money is safe. This will be resolved very speedily and a restructuring of the bank will happen.”
Sitharaman explained that once the RBI’s restructuring of Yes Bank is completed, a new board of directors will be put in place. Deposits and liabilities will continue unaffected and employment and salaries will be assured for at least one year, she said.
The Finance Minister said that the government and the banking regulator had been monitoring the situation at Yes Bank since 2017. Sitharaman said, she herself had become directly involved in the matter from May 2019 onwards.
Sitharaman pointed at corporate governance lapses, wrong asset classification, weak compliance and risky credit decisions as few of the things that were wrong at the Mumbai-based private lender.
Yes Bank did make some “genuine attempts” to raise capital and improve their financial health, Sitharaman said. However, by November 2019 it was clear that “there was no hope”. That is when the RBI and government started actively engaging with the bank, Sitharaman said.
The Reserve Bank of India has announced a scheme of reconstruction for Yes Bank details of which can be seen here.
RBI To Submit Report On Yes Bank
Finance Minister said that she has asked the RBI to submit a report on the reasons that led to the failure of Yes Bank.
The RBI would prepare a report on regulatory gaps, and “cause of the problem, and the role of the individuals in causing and addressing the problem,” Sitharaman said. The RBI will also report the government on the adequacy norms maintained by Yes Bank.
“I want the RBI to ensure that the due process of law happens with urgency,” Sitharaman said.
SEBI To Look At Corporate Governance Issues At Yes Bank
The Finance Minister said that SEBI has already started acting on the corporate governance lapses at Yes Bank and the markets regulator will be looking into the situation.
FM Assures Depositors That Their Money Will Be Safe
We can assure all depositors that their money is safe. This will be resolved very speedily and a restructuring of the bank will happen.Finance Minister Nirmala Sitharaman
Will Not Let Any Institution Fall: Sitharaman
As I have repeatedly said, I will not allow for any institution to fall off a cliff.Finance Minister Nirmala Sitharaman
Yes Bank To Get New Board After RBI's Restructuring
Under the restructuring plan by RBI:
- A new board will be appointed after the restructuring happens.
- Deposits and liabilities will continue unaffected.
- Employment and salaries assured for at least one year.