New Delhi [India], Mar 7 : Senior Congress leader P Chidambaram on Saturday termed the resolution plan proposed to deal with Yes Bank crisis as "bizarre", saying that a better option would be for SBI to take over loan book of Yes Bank at one rupee.
Addressing a press conference here, the former finance minister said loan book of Yes Bank jumped from Rs 55,633 crore in March 2014 to Rs 2,41, 499 crore in March 2019.
"The plan appears to be that SBI will invest Rs 2,450 crore to pick up a 49 per cent stake in the restructured capital of the Bank at a price not less than Rs 10 per share (face value Rs 2). This is bizarre when the net worth of the bank is perhaps zero. We will await details of the plan before we comment further," he said.
"A better option would be for SBI to take over, under orders of RBI, the loan book of Yes Bank at Re 1 and an obligation to assure all depositors that their money is safe and will be returned," he added.
Chidambaram said that the State Bank of India should simultaneously make every effort to recover as much as possible of the outstanding loans.
"There are other options that can be explored in consultation with former Governors Dr C Rangarajan and Dr YV Reddy," Chidambaram said.
On Friday, the Reserve Bank of India (RBI) placed in the public domain a draft scheme of reconstruction for Yes Bank, a day after it superseded the board of troubled private sector lender with immediate effect.
It said that State Bank of India (SBI) has expressed its willingness to make investment in Yes Bank and participate in its reconstruction scheme.
The draft plan proposes that the investor bank will invest in the reconstructed bank for up to 49 per cent stake.
The RBI plans to alter the authorised capital for the reconstituted bank to Rs 5,000 crore and number of equity shares will also be altered to 24,000 crore of Rs 2 each aggregating to Rs 48,000 crore.
"It has been proposed that the investor bank will not reduce its holding in the new bank below 26 per cent before completion of three years from the date of infusion of the capital," said the Draft Yes Bank Ltd Reconstruction Scheme 2020.
As per the plan, all employees of the reconstructed Yes Bank will continue with the same pay for at least one year. The board of directors of the reconstructed bank will have the freedom to discontinue the services of key managerial personnel at any point of time after following the due procedure.
The public can submit suggestions and comments on the draft plan until March 9.
Finance Minister Nirmala Sitharaman had said on Friday that the Indian banking system has had severe crises due to the way UPA governments functioned.
"I have reasons to put the blame on that regime. The so-called self-appointed competent doctors are blaming us today but they handled the United Western Bank in their regime. It was on the verge of collapse in 2006. It was forcefully merged with IDBI then," she had said.
( With inputs from ANI )