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

withdraw an amount in excess of Rs 50,000 from the bank from 5 March to 3 April, irrespective of the number of accounts they held.

‘The Central Government hereby also directs that during the period of moratorium, the Yes Bank Limited, Mumbai, Maharashtra (the said banking company), shall not, without the permission in writing of the Reserve Bank of India make, in the aggregate, payment to a depositor of a sum exceeding Rs 50,000 lying to his credit, in any savings, current or any other deposit account, by whatever name called,’ said the notification by the government.

In a late evening notification, the RBI had said that the entire board of YES Bank had been superseded and Prashant Kumar, ex-DMD and CFO of State Bank of India had been appointed as the administrator under Section 36ACA (2) of the Banking Regulation Act. The Department of Financial Services, under the Ministry of Finance, also issued the directions in exercise of the powers conferred by sub-section (2) of Section 45 of the Banking Regulation Act, 1949 (10 of 1949).

One of the bank’s executives, who was part of the RBI’s mediation talks, told me in clear terms: ‘All hell has broken loose.’ The shocked management and board were caught off guard. They had no clue that it was happening and that it was happening, so soon. There were no further calls made. The next thing we knew was that Ravneet Gill, who wasn’t nursing any grudges, went back to office twelve hours later, on 6 March, and handed over to Prashant Kumar.

I tried contacting Ravneet, who, going by the accounts of the people close to him, was very media-savvy. But after that point, he went incommunicado. Calls weren’t going through to him. He wasn’t seeing his WhatsApp messages.

The plan was for the SBI to bail YES Bank out, with other banks providing a supporting role. But there was discontent in SBI against this deal. There was vehement opposition by the SBI against the RBI forcing down YES Bank down its throat. ‘They (RBI and the government) think that SBI is a bottomless pit. Why should we even bailout some other entity,’ a senior official from SBI told me hours before the RBI dismissed the YES Bank board.

Personally, it was an emotional moment for me. I had been warning about the inevitable doom for a year now. However, all tricks were used against me: from legal notices to Twitter trolls to personal slander. One such trick was a letter, which was masked as a legal notice and signed by the bank’s marketing head. It said, ‘Either he (talking about me) is completely ignorant or acting at behest of short-seller cartel to promote fear mongering.’

The RBI cited six critical issues for taking charge of the bank — from deterioration in asset quality, governance issues and false assurances of raising capital to no serious investors in sight and outflow of liquidity by way of deposit withdrawals. All these were happening since October end, but it seems that the RBI was giving the bank too long a rope, and that is what has been vetted through interviews with various directors. Earlier in October, the RBI had waited for shadow bank DHFL, which was closely connected to the YES Bank fiasco, to go bankrupt with about Rs 80,000 crore dues.

I somewhere felt that I had been vindicated, but I also knew that this story hadn’t ended. The depositors’ money was safe, but the road map was unknown. In my opinion, had the RBI acted on time, there would have been no need of the moratorium as well. The bank needed capital to write off its bad loans and was bleeding on that front. The capital wasn’t coming. The depositors, who were providing the buffer in terms of funds, had fled. Hence to prevent the liquidity position, the RBI was left with no option but to place a moratorium on withdrawals.

The next morning, on Friday, the country woke up to gloom. India’s fourth largest bank, and a story that was said to be of great entrepreneurship, had failed. The customers were just trying to grasp what had hit them. The YES Bank crisis was reminiscent of a similar emergency in the Mumbai-based PMC Cooperative Bank, which unfolded in September 2019. The RBI had imposed similar curbs on the bank after superseding its board. In the case of PMC Bank, over 70 per cent of the loan exposure was to HDIL — which by now is a bankrupt real estate company. The connections don’t end there, as we will discuss in the next chapter.

Utter chaos prevailed at branches and ATMs of YES Bank across the country on Friday as depositors rushed in panic to withdraw their money. After the RBI placed curbs on withdrawals and sacked the bank’s board, the customers rushed to ATMs and the bank’s branches. As the queues bulged through the day, the bank ran short of cash and the ATMs stopped dispensing cash—adding to the customers’ misery.

I had a personal worry. My brother had his salary account with YES Bank and used to get his salary on 5 March. Thankfully, realizing that something wasn’t okay, he had transferred his money to another bank overnight. But all were not lucky as him. ‘Unfortunately, my salary account is with YES Bank and I’m unable to do online transactions since last evening. The server is down. I am worried that I’m not going to get my money immediately,’ said Annet Pillai, a communication professional whom I spoke to in March.

The RBI had asked YES Bank to stop dispensing cash from its ATMs and directed it to disburse cash only through its branches, so as to keep a check on withdrawals. After the RBI’s direction, the National Payments Corporation of India (NPCI) took the bank’s ATMs offline and customers weren’t able to withdraw money. The bank’s ATMs are manufactured by NCR Corporation but maintained by various other agencies.

The customers, who visited the branches, also were left in a lurch due to the