The Yes Bank crisis has created a kind of fear, uncertainty and doubt in the mind of its account holders. Currently, it seems that money in Indian banks- private or nationalised is not safe. It means all the banks are sailing in the same boat and the possibility of their sinking at any moment cannot be ruled out.
Depositors of all banks are in the catch-22 situation where to keep money when the future of banks is so dicey. The Yes Bank-like crisis can arise in any bank. The worried Yes Bank customers are not sure when to get their entire hard-earned money despite assurance by the Reserve Bank of India and Central government. Fear is looming on the accounts holders of other banks too.
ED arrests Rana Kapoor
Meanwhile, the Enforcement Directorate (ED) arrested Rana Kapoor the ‘all in all’ of Yes Bank on Sunday morning concerning a money laundering case, produced in a Mumbai session court. He will remain in ED custody till March 11. The agency is set to investigate the role of several companies which are directly or indirectly controlled and run by his family members.
Rana not cooperating with agency
ED’s lawyer Sunil Gonsalves said at the hour-long hearing the total proceeds of the alleged crime amounted to Rs 4,300 crore, and that Rana Kapoor had refused to cooperate with the investigation.
No foreign tour
Meanwhile, Roshni Kapoor the daughter of Rana Kapoor was trying to sneak off to London by British Airways but stopped. The Enforcement Directorate (ED) had also tightened the screw against Rana Kapoor’s family so that they can’t go away from India, the entire family is under ED scanner. Remember many culprits have already left the country after committing fraud with the banks.
Withdrawal limit only Rs 50,000
In the recent development, RBI has cut the size of Yes Bank’s withdrawal limit cap of Rs 50,000 of its accounts holders. Any withdrawal above this amount will need to take special permission from the Reserve Bank of India.
RBI appoints a new admin
RBI has also superseded the board of Yes Bank and appointed Prashant Kumar, former Deputy Managing Director and CFO of State Bank of India, as a new administrator. Despite the deepening crisis the government and RBI have been ensuring depositors’ that their money will remain secure so that they can’t go on the rampage.
Customers on receiving end
The money of Yes Bank depositors’ is hanging in the balance as they are facing issues such as poor net banking services, struggling to transfer their funds or check online bank accounts details. This is not enough even customers using UPI services have been facing difficulty in transferring their funds.
Rana a forceful lender
Under the leadership of Rana Kapoor the growth rate of Yes Bank in less than a decade reached over Rs 3 lakh crore. According to experts familiar with the development unveil that Rana was known as a forceful lender. Yes Bank under the guidance of its MD was always ready to lend money to companies while other banks thought twice in releasing. Yes Bank used to lend money on the high-interest rate. This led to the remarkable growth in the bank’s loan book, profits and deposits.
No return of loan from companies
As the name suggests ‘Yes’ means always yes in giving the loan to industries, which was not a wise decision seeing the slum down of the Indian economy. Some of the heavyweight industries which had taken loans from Bank but failed to return. Hence its ultimate result turned futile for the Yes Bank as most of the large companies pull their shutter down or turned into non-performing assets. The list of some of the big companies is as such-Anil Ambani’s Reliance Group, IL&FS, DHFL, Jet Airways, Essar Shipping, Cox & Kings, Café Coffee Day and many more.
Blame game begins
However, the BJP and the Congress are blaming each other over the severe crisis in the Yes Bank . BJP is blaming Gandhi’s family while the opposition alleged that PM Modi and finance minister Nirmala Sitharaman were involved in the Yes Bank’s catastrophe. It seems the Central government was napping while the crisis was gripping in Yes Bank.
Demonetisation a ‘Masterstroke’
Yes Bank has been passing through from financial crunch over the last couple of years as it was not able to recover the loan so the bank turned in the loss. Rana Kapoor as a sycophant dubbed Modi’s demonetisation policy as a ‘Masterstroke’. Since the demonetisation crisis in the Indian economy has been deepening.
The Yes Bank management had given a false assurance to RBI that talks are in progress with several investors but this commitment was nothing else than building a castle in the air.
PMC faces same issue
The banking sector and other finance companies in the present government have been going through a difficult phase. Significant work needs to be done to remove the loopholes in the banking sector, which is the fundamental pillar of our economy. Punjab & Maharashtra Co-operative Bank Limited (PMC) and Dewan Housing (a leading housing finance company) recently faced a similar situation. Unfortunately, many depositors of PMC died of a heart attack.