In his book titled ‘The Custodian of Trust’, Kumar said SBI was reluctant to play the role of lender of last resort for Yes Bank, but circumstances forced it to rescue the country’s fourth-largest private sector lender. did.
“Initially, I was confident that after achieving the merger of six banks, SBI would be left with the task of saving one more bank. The last bailout by SBI (in 1995) was Kashi Nath Seth Bank, a family-owned bank. was working in some districts of Uttar Pradesh (UP),” he said.
He mentioned in the book published by Penguin Random House India (PRHI) that there was pressure by the RBI to find other investors till March 13, 2020, to avoid any cascading impact of the country’s fourth largest private sector on the financial system. .
On March 5, 2020, the Reserve Bank of India imposed a moratorium on troubled lender Yes Bank and imposed a moratorium on withdrawals of Rs 50,000. Thereafter the moratorium was lifted on March 18, 2020 due to the restructuring plan notified by the government on March 13.
As per the restructuring plan, SBI cannot reduce its stake in the bank below 26 per cent for a period of three years, while other investors and existing shareholders will have a lock-in period of three years for 75 per cent of their investments. Yes Bank.
However, the lock-in period will not be applicable to shareholders holding less than 100 shares.
SBI, which holds about 49 per cent stake in Yes Bank, was joined by other private players such as
, Box Mahindra Banks, HDFC and Federal Bank with hedge capital to save the reputation of the private sector banking industry as several state governments had already issued directives to withdraw money from private banks.
This compelled the RBI to take steps for damage control by writing to all state governments to assure them about the safety of money deposited in private sector banks.
“V Vaidyanathan”
Also includes a surprising late entrant with a commitment of Rs 150 crore. Despite all these commitments, I was still falling short of the target of Rs 10,000 crore.
“In an effort to bridge the gap between the proposals and the investment required, I called (CS) Ghosh
. He reluctantly agreed to invest another Rs 250 crore, which was a big relief.”
“The successful rescue of Yes Bank in a short span of time is a unique example of fully coordinated action by the government, RBI and public-private partnership,” he said.
The book states that Yes Bank could not have been saved without the firm and shrewd leadership provided by the RBI governor, Shaktikanta Das, and two deputy governors, MK Jain and NS Vishwanathan.
One lesson that clearly emerges from these developments is that the system should always be wary of high-profile CEOs who pretend to have lucrative lifestyles, regardless of company ownership, they said, dazzlingly. and can bring success in the short term. For a long time, many such enterprises have ceased to exist.
“India has a dream of becoming a $5 trillion economy in the next five years. A strong banking and financial system is an essential condition for achieving this dream… A transparent licensing and ownership policy for banks is needed so that These can be supported by efforts,” he said.
Kumar had a three-year tenure (October 2017-October 2020) as the head of SBI, which alone has a market share of over 20 per cent. In the book, he described it as the period during which he held the responsibility of the Speaker, it cannot be called ‘ordinary’ under any circumstances.
When he took over the reins of SBI, the Indian banking industry was going through its toughest phase for the Indian banking sector as the non-performing assets (NPAs) were at a record high after the Asset Quality Review (AQR).
The problem of non-performing loans (NPLs) coupled with the failure of some major non-banking financial companies (NBFCs) and the near-collapse of the fourth largest private sector bank in the country, severely affected the balance sheets and profitability of banks. Was. The country, Yes Bank, posed a serious threat to the country’s private sector banking system, he said in the book.
Kumar shares his “incredible journey” as a banker through his memoirs – from joining SBI as a probationary officer in 1980 to becoming its chairman in 2017 – over the course of his career in India’s banking sector Captured many changes.
Prior to his appointment as Chairman, he was the Managing Director (National Banking Group) at the bank overseeing retail trade and digital banking. He was instrumental in ensuring cash flow to every nook and corner of the country through the vast network of banks during demonetisation.