Bhubaneswar: Even as State Finance Minister Niranjan Pujari put all his might to drive home the message that there is no motive behind huge cash deposits by SJTA in Yes Bank, except the banking motive, the answers, however, failed to stop the tongues wagging.
In response to opposition charge, Pujari said, "Odisha government has no role in it. The fund was deposited in the bank as it had offered the highest rate of interest in a tender process".
He further added that as many as 12 commercial banks participated in the tender process. Three banks offered high interest rates on one-year TDR (term deposit receipts). And Yes Bank quoted the highest of 8.61 per cent rate of interest followed by IndusInd Bank - 8.6 per cent and HDFC bank - 7.75 per cent.
The State Finance Minister, therefore, justified the SJTA deposit of Rs 545 crore in an one -year TDR at the Yes Bank. The reason: Yes Bank offered higher rate of interest.
Pujari has revealed many big things. In order to show that Odisha government has no role, he said, "The finance department on October 21, 2019 wrote to all the departments to verify financial health of banks before parking money".
And here lies the big catch. The date of issuance raises a big question mark.
Consider the Chronology: A) Yes Bank had hogged headlines in 2018-19 (before March 31 2019), when the withdrawals were so huge that the bank had recorded a credit-deposit ratio of over 100 per cent. In simple, C-D ratio of over 100 per cent means bank's credit portfolio has been more than the deposit amount it had in the year.
B) SJTA opened as many as 5 TDRs in March 2019 and another TDR in September 2019.
C) Odisha Finance Department issued a circular in October 2019 asking all departments to assess a bank's health before parking funds.
The analysis of the sequence shows the notification of the State Finance Department came too late.
Moreover, Pujari blamed RBI. He said, " The RBI had never given any indication of the financial situation of Yes Bank before March 5, 2020".
Now, consider some facts. The first moot point is why customers made huge withdrawals in 2018?
Sample the context: In September 2018, RBI refuses to give Chief Executive Officer (CEO) Rana Kapoor an extension to his term. And Kapoor had to step down by end of January 2019.
The reason RBI cited then was: "Persistent governance and compliance failure reflected by the bank’s highly irregular credit management practices, serious deficiencies in governance and a poor compliance culture".
In November 2018, Moody Investors Services downgraded its ratings to non-investment grade and had also changed its outlook to 'negative' from 'stable'.
These two big developments made many big customers of Yes Bank read the RBI and Moody's lips, and they went for huge withdrawals during 2018-19. But Odisha government, despite having qualified human resources, failed to read the lips.
The bottom line: Yes Bank is having trouble in boosting capital base. And the high rate of interest had been a policy decision to mobilise big retail deposits.
So, when the whole country is knowing about troubled times for Yes Bank, the statement that Odisha govt has no information is simply looks unconvincing.
Also Read: Yes Bank Collapse Countdown Begins In 2018, Odisha Govt Looked The Other Way!