Failure of banks in any economy is nothing unusual, which can happen under an unforeseen or unfactored crisis. The wobbling fortunes of Yes Bank were noticeable for quite some time following the collapse of DHFL Ltd, R Com and Zee group among others. It now is being revealed that the founder Chairman of Yes Bank, Rana Kapoor, ignored all banking protocols and exposed the bank and the investors’ deposits to irretrievable danger by deceit, connivance with the borrowers and for personal benefit. The total losses of the bank due to bad lending to 44 companies belonging to ten corporates, which totals Rs.34000 crores, which could only be noticed when the ED swooped over the case recently.
Rana Kapoor, it has emerged, had floated 78 shell companies to route the Rs.600 crores bribe he had received from DHFL for sanctioning loans of Rs.4735 crores. Kapoor’s ill-gotten wealth could exceed Rs.2000 crores, which includes a palatial bungalow in Lutyens’s Delhi. The otherwise docile shares of Yes Bank saw a spurt in August 2018, when it peaked to Rs.393 per share, to fall and rise again to Rs. 275 on 29th March 2019. Thereafter it is a steady downfall, the prices touching an all-time low of Rs.5.55 and settling around Rs.16.15 on the same day, 6th March 2020.
Rana Kapoor was barely summoned to the ED when a panicked Finance Ministry started sending recovery package bytes for the beleaguered bank through their favourite media networks. The reason could have been to avert a disaster and crash of the financial market, which might have had serious ramifications over the region, if not the world.
What confounds is the alacrity of the RBI, SBI in jostling to announce bailout programs, initially Rs.10K crores and later expanded to Rs.20 K crores. More offers have come from Kotak and I guess LIC too will become a contributor to the reconstruction of the bank. A few are full of praise over the government’s quick-fix measures, which to me are atrocious. Yes Bank has not succumbed in course of its ordinary business deals but has fallen due to a criminal nexus between the banker and the borrowers and the lax of supervision and monitoring.
Instead of proceeding with the same alacrity in apprehending the culprits the government’s proposal to infuse capital, which is way shorter than the $ 4.4 Billion required to capitalize as per norms is bizarre and unethical. The government cannot become the parachute to bailouts in the brazen acts of repetitive criminalities.
The stocks have nevertheless tanked, though for different reasons now. How many private enterprises would the Central Bank come and safeguard from collapsing? I guess, save some general steps to boost the economy the government cannot any failing businesses, which is part of the business.
The entire saga of Yes Bank, the unusual movement of its shares, the free wild run of the bank and the late noticed losses all point at only one thing – blind and inept governance. The entire banking managed by the private sector stands to be doubted and flayed for a few black sheep in the trade.
Sampath Kumar
Intrépide Voix
