Rana Kapoor, former CEO YES Bank
Rana Kapoor, former CEO YES Bank
In My View

Yes Bank fiasco needs proper investigation

P.C. Punnen

P.C. Punnen

We are on a cusp of changes we believe. But certain things won't change, we must remember. One is our attitude, or conduct. Rules of law, enforced by the government, may or may not work. In many cases it won't work. It is forgotten or subjected to our own deviousness. That applies to the Yes Bank case too


Yes Bank, one of India's largest lenders, has been caught. The government has taken a step which seemed unwanted. Finance minister Nirmala Sitharaman the other day said investors don't have to worry, everything will be hunky dory. One wishes what she said will be correct and that investors in Yes Bank will not lose anything.

Yes Bank's administrator appointed by the RBI has been asked by the CBI to assess the total alleged fraud caused by corporate borrowers to the bank. Anil Ambani was summoned on 10th March. The allegation is that he took a loan of around Rs.10,000 crores from Yes Bank.

The other suspected groups include Dewan Housing Finance Corporation (DHFL), Jet Airways, Cox and Kings and the Avantha group. These names were in the list released by Nirmala Sitharaman reported The Wire. A Reliance (Anil Ambani group) statement said that the loans were fully secured. ‘We are committed to honour our repayment to Yes Bank’, it said.

The Indian banking system has detected fraud of Rs.71,000 crores in the financial year 2018-19. Yes Bank was given a moratorium till recently by the government. That being the case, one wonders why the State Bank of India, India's biggest bank , instead of taking over Yes Bank decided to acquire 48.2 percent share in it for Rs.6050 crores.

If the SBI had decided to fully take over the Yes Bank what would have been the reaction of the public and Yes Bank's shareholders? Perhaps it would have been challenged in the courts and the court would have perhaps upheld the takeover or not. Perhaps politics was involved in the move. The BJP and the Congress and many of the opposition parties would have taken a stand for the separate functioning of Yes Bank. One can't be sure of these things. That is Indian politics.

This reminds one of the functioning of Co-operative banks. The CPM was all for the merger of Kerala's co-operative banks into one. The reason being they have acquired enough votes to announce the takeover of all co-operative banks. That is why the Congress and the Muslim League opposed it. Now except for the Malappuram unit of the Co-operative Bank, all banks are merged in to one. And there by hangs a tale.

The Co-operative Banks in other states too are the same: they are the biggest money lenders to our political parties. Almost the same thing is true with the Yes Bank and other big banks.

Yes Bank itself lent a lot of money caring two hoots for the laws. Perhaps that explains the bulk of money our biggest industrialists have been given. In a nutshell, the difference between India's big lenders and the state's poor lenders is the amount. The beneficiaries have the same goal; more money or big money.

Yes Bank was incorporated in 2003. The bank had to wait till 2005 to foray into retail banking. It was founded by Rana Kapoor who was arrested by the Enforcement Directorate on fraud charges to the extent of thousands of crores: 30,000 if one remembers right. In 2008 Co-founder Ashok Kapur was killed in a terrorist attack. Since then Rana Kapoor was in absolute control of Yes Bank. All went on well till the RBI's involvement. RBI had opposed mini private banks to take over Yes Bank but Yes Bank was too big a trouble for any one banker. The RBI finally decided that Kapoor must be ousted. Finally the trouble with Yes Bank imploded and he was in custody till the 16th of March.

Why was the SBI very coy about taking control of Yes Bank? Why was the RBI despite knowing of the wrongdoings of Kapoor, reluctant to take action and why did the government of India wait till this new year? These questions require proper answers. But somehow someday Yes Bank will be discussed and debated. Kapoor could be made a victim or scapegoat for all that Yes Bank has done.

Ambition can be dangerous. Kapoor has done well but has been too ambitious, found equally or more in ambitious businessman like Ambani and politicians will of course disown or ditch Yes Bank.