Yes Bank Bought by Yes-Men

Yes Bank has almost gone under, with the State Bank of India (SBI), the largest bank in India, taking over its operations. But for the status SBI has been reduced to now, that of being yes-men, Yes Bank would have gone kaput. This is an unfair burden on the depositors of SBI who did not sign up for rescuing an almost bankrupt private sector bank. Despite its large capital base, state ownership and dominance in the banking sector, it is not clear whether SBI will actually be able to rescue the troubled bank. The most alarming part in all of this is that things were allowed to come to a pass despite the knowledge of a crisis building up in the bank for at least two years, if not more.

If the economy is going through a severe slowdown for eight quarters straight and a general state of low growth in the last five years with overall bank credit growth slowing down in tandem, is it reasonable to have a lending institution whose loans were rising at an almost exponential rate? Just one figure will suffice. The loan account of Yes Bank increased from ₹55,633 crore in March 2014 to ₹2,41,999 crore in March 2019, a whopping (little over) four-time rise. Contrast this with the total bank credit which went up from ₹59,94,096 crore to ₹97,71,722 crore during the same time, which is not even double the base figure.