TIA BUSINESS DESK
Raising severe objections over State Bank of India (SBI)’s draft reconstruction scheme for revival of Yes Bank, senior IAS officer Ashok Khemka shoot off a letter to Prime Minister Narendra Modi and Reserve Bank Governor Shaktikanta Das arguing that SBI is providing an “unfair public subsidy” to existing owners of the private lender using the wealth of SBI shareholders.
Calling the protection of existing common equity Tier I capital a “scam”, Khemka said the total capital of Yes Bank should be written down permanently, before bringing in public money in any form. “Yes Bank, like IL&FS, DHFL, PMC, is not a case of genuine business loss. The losses are due to fraud by its promoters, directors, management and overlooked by regulators, auditors, credit rating agencies, trustees and other statutory intermediaries,” he said, calling for action against such entities.
He said licences of auditors, credit rating agencies and trustees responsible must be suspended or cancelled. “Promoters committing fraud must be declared individually bankrupt and their personal wealth seized to repay creditors and depositors,” the bureaucrat suggested.
In a tweet he also wrote: “Many companies going bankrupt. Ultimate loss is of public and creditors. Ever heard of promoters, auditors, rating agencies, trustees, regulators becoming insolvent? They flourish. Daylight robbery is justified with convoluted jargon or creating scare. How long will this last?”
On Friday, the Reserve Bank of India unveiled a reconstruction scheme under which SBI would be acquiring a 49 per cent equity stake in the Yes Bank, pumping in around Rs 10,000 crore in the troubled lender. The reconstruction plan also includes permanently writing down the Additional Tier 1 capital of Rs 10,800 crore raised by Yes Bank.