UPA didn't allow any bank to reach a state of collapse: Chidambaram slams Sitharaman

Amid Yes Bank crisis, former Finance Minister and senior Congress leader P Chidambaram on Friday slammed Finance Minister Nirmala Sitharaman and said that UPA did not allow any bank to reach a state of collapse.

Soon after Sitharaman addressed the media over the Yes Bank crisis, Chidambaram in a series of tweets wrote, "Listened to Finance Minister's address to the media. It is obvious that the crisis has been in the making since 2017 and the government did practically nothing except 'talk to the RBI'."

He added, "As expected, the Finance Minister has indirectly blamed the UPA for the near collapse of Yes Bank contrary to her own claim that the crisis started in 2017. Did you notice that the Finance Minister did not acknowledge the numbers of the loan book of Yes Bank? Did you notice that Finance Minister did not explain how the loan book miraculously jumped from Rs 55,633 crore in March 2014 to Rs 2,41,999 crore in March 2019?"

Chidambaram said that Sitharaman was focused on what happened during the UPA regime while addressing the media.

"What happened was UPA did not allow any bank to reach a state of collapse. Under UPA, weak banks were merged with other banks well in time to avoid a crisis... The decisions to merge were taken by RBI Governors Dr C Rangarajan and Dr Y V Reddy. Why doesn't the Finance Minister call them and ask them to explain their decisions? She might find that the decisions were correct and taken by competent Governors," Chidambaram tweeted.

He added, "What is the government doing today? Is the government not merging weak public sector banks with stronger public sector banks? Naturally, Finance Minister blamed the 'legacy' of UPA. She will say that for the rest of the tenure of the BJP government!"

Earlier today, Sitharaman said that the Reserve Bank of India (RBI) will bring in a reconstruction plan for Yes Bank within the moratorium period of 30 days so that the depositors do not face any issues.

"While our government is committed so that the interests of the depositors are completely safeguarded, equally we want the RBI to ensure that the due process of law is followed to ensure that who led to this problem in Yes Bank," she said.

Sitharaman said that State Bank of India (SBI) has expressed a willingness to invest in Yes Bank. "The deposits and liabilities will continue unaffected as before. Employment and salaries are assured for at least one year."

She said that the RBI has been monitoring issues relating to Yes Bank since 2017. "The RBI noticed that governance issues were of serious concern. There was definitely a culture of weak compliance. There were wrong asset classifications together with risky credit decisions. Since RBI started getting clear indicators, they took some concrete steps which they have informed about," she added.