The Banker Who Crushed His Diamonds Furquan Moharkan (books to read in your 20s .TXT) 📖

reader friends who were banking with YES Bank were getting in touch with me. Many even asked me pointedly, till when will the bank survive? I had to be guarded but honest. So, I would say: ‘You never know, but if things continue as they are, the bank can’t survive for more than five–six weeks.’

DOOM’S DAY

Days before its mighty fall, YES Bank had become the theatre of the absurd. At a time when brokerages were just stopping short of publicly giving calls on YES Bank, astrologers threw their hats into the ring.

In one such blog, astrology website GaneshaSpeaks expected the bank’s troubles to end by March 2020. And their logic: ‘On analyzing the Surya Kundali of YES bank, it can be found that it is under the influence of the inauspicious planetary transit of Saturn. Saturn Sade Sati is responsible for the struggles and disturbances in its operations. This may be having an impact on your life as well! Know its effects and remedies with your personalized Saturn Sade Sati report now! Chances are that it may find relief from the said situation in the year 2020 post-March. Until then, it may face more challenges in its way, foresees Ganesha.’

So how was the planetary movement affecting the bank, according to GaneshaSpeaks?

‘Currently, Saturn is transiting over the ascendant house in Surya Kundali. This transit affects the natal Sun adversely, hence, the bank is likely to face difficulties on the side of the government authorities. It might get affected by changes in the rules and regulations of the banking sector. In the bank’s Surya Kundali, Jupiter is transiting from the 12th house of loss and secret enemies, which adds up to the adversity of the situation. There are chances of financial losses in the current period. This might only further increase the financial pressure and hardship on the bank,’ the blog published on Yahoo predicted.

As this blog was probably being written, around 500 kilometres away, at the RBI office in south Mumbai, officials from Tilden Park were meeting the central bank’s officials. It was about 4 p.m. The Tilden Park officials told the RBI that they were willing to invest $500 million at YES Bank. However, the RBI officials cut them short by saying: ‘Why are you only talking about it? Where is the money? Please put it in the escrow account of the bank.’ An escrow account is where funds are held in trust whilst two or more parties complete a transaction. This means a trusted third party, such as Escrow.com, will secure the funds in a trust account.

By the next morning Tilden Park had transferred the sum to YES Bank’s escrow account. Yet the RBI had its apprehensions. In its weekly meetings with the YES Bank management, it was clearly mentioned that the bank would need $3 billion as capital and write off Additional tier 1 bonds — perpetual bonds without any expiry date that banks are allowed to issue to meet their long-term capital requirement. The RBI was convinced that it was beyond the capacity of the bank to pull it off.

Early on the morning of 5 March, the story about the government okaying the bail-out plan led by SBI, which was being deliberated upon, broke. I checked with the RBI. Since the bank was expecting the results by 14 March, I was expecting the plan to be implemented by then. But what the RBI sources told me left me amused: ‘We can’t wait till 14 March. We don’t have that much time.’

Behold, this was the same regulator who had egged on any kind of bailout in the past seven months, when things were crystal clear. We knew a major action plan was on the cards, but no one knew when it would be implemented.

During the day, the news of a probable bailout spread like wildfire. The YES Bank stock, which was now determined by ill-informed retail investors, went into a frenzy. The retailers, who by now had lost hope in the bank’s future, considered this news to be a saviour. Within hours, YES Bank shares jumped by 29.3 per cent and ended the day with gains of 25.6 per cent. But the retailers went about buying the stocks thinking ‘acche din aane waale hai (Good days are coming)’. Meanwhile, the bank was unaware of it completely. At least that is what it seemed to be from YES Bank’s afternoon statement on 5 March.

‘In the said matter, we would like to clarify that as on date, the bank has not received any such communication from RBI or any other government or regulatory authorities, or from the SBI, and we are unaware of any such decision. Therefore, we are not in a position to comment on such news item,’ the bank, in its 5 March clarification to the exchanges said. At this point, the bank was certain that it would be able to raise the much-needed funds.

‘The bank in the usual and ordinary course of its business continues to explore various means of raising capital/funds through issuance of securities to diverse set of investors to meet its business/regulatory requirements, subject to compliance with prescribed procedures and receipt of statutory/regulatory approvals,’ it said.

It did seem like the bank wasn’t aware of the developments. The RBI, along with the saviour banks, was planning to take unilateral action. ‘We didn’t know it was happening. We came to know around the time you came to know about it as well. We didn’t even know the exact details of the plan,’ an executive from the bank, who was in regular touch with the RBI, told me.

The markets closed, but the story hadn’t ended. After filing my daily stories, around 8.45 p.m. on 5 March, the government and the RBI finally swung into action. The RBI placed YES Bank under moratorium and restricted withdrawals to Rs 50,000 as the central bank assumed control of the troubled private sector lender. According to a gazette notification by the Ministry of Finance, no person could