ALL ABOUT `YES'

A week back, Reserve Bank announced that the customers of Yes Bank Limited ( `YES'), a listed private sector bank was allowed to draw Rs 50,000/- in a span of 30 days only. Crores of rupees of customer of YES are locked up either in savings account, fixed deposit, recurring deposit, current accounts etc. Being listed with BSE and NSE there are investors in the shares of YES.

Had the Government not intervened YES would have failed. Resulting in not being able to honour the cheques issued by its customers. Savings Bank Account holders would have got upto only Rs 1 Lac for against their balance in their accounts under the Deposit Linked Insurance Account that too after much hassle. However, the amount of Rs 1 Lac has been raised to Rs 5 Lac in the budget for 2020-21. It will be effective once the budget proposals are put into effect. Did the Government get the premonition of Bank failures or it was pragmatic approach by indexing. Rs 1 Lac compensation to the depositors is there for long. The raising of the upper limit should have been looked into earlier. The country rests on concepts borrowed from advanced economies but it is soon forgotten of making it workable in the country.

Central Government intervened through its arm, State Bank of India (`SBI') to defend the failure of YES. Revival package is being worked out by SBI under the aegis of RBI. Some names such as HDFC ( not the bank) and Kotak Bank expected to participate in the revival package being finalised.

YES has therefore created a situation where investors have lost money. Depositors have not lost as yet but are stranded.

Investigations are on . The promoter is being quizzed by CBI. News is pouring out through the press. Summing up from the `hall collection' from the news in the print and digital mode, it can be said that YES failed due to its marriage to the word, `YES'. YES did not bellieve in the word, `NO'. Like the name it adopted a pragmatic approach. It paid higher interest on savings bank account deposits, fixed deposits and senior citizens were kept happy with extra interest. YES meant light blue unlike dark blue of HDFC Bank. The colour meant that sky was the limit of YES.

News in the press apprises the public that with the depositors' money the promoter lent it to borrowers known to him. He said `yes' and the money was lent. How much money can be from the accounts. Being a listed entity, there were quarterly results, audit,internal auditors, transaction auditors, audit committees, board of directors, RBI representative on the Board, independent directors, women directors, management committee, apart from the vice presidents, assistant vice presidents , line managers and staff managers apart from the ground level officials under whom YES functioned.

YES had the best of brains from IITs, IIMs, B School Graduates, CAs yet it could not mend the rot. Their brains could not be utilised. Investigations are not out but what can be assessed from the facts and circumstances of the case is that in YES the officials followed a yes culture. If the CMD who headed the board said , `yes' all down the line said `yes'. From the deposits which were attractive due to higher interest , the CMD advanced the amounts after providing for Cash Reserve Ratio ( CRR ) of 4 per cent of the Demand and Time Deposits e.g. savings bank account, current account deposit, fixed deposit, recurring deposit and invesing 18.25 per cent of it in SLR Securities. Priority sector lending norm was also adhered. Balance amount in the hand of YES was advanced to borrowers mostly known to the promoter by applying `yes' formula. CMD nodded in the affirmative which denoted yes. Down the line all said yes and a loan was given. Proposals moved from the top to the bottom instead of the other way round.

Banks operate through the delegation of authority chart. Heads of branches are given power of attorney to execute their functions. The above are followed to give the officials of a bank power to take decisions and function. It cannot go to the head office for each and everything. Any proposal for advance in a Bank moves from the lowest rank to the highest rank fixed by the delegation of authority. Press reports go to show that the proposal were dictated from the sanctioning authority, prepared and made to go up wards for sanction. This is common in banking industry. There are several instances where innocent officials have sacrificed their retirement benefit and are let to lead sleepless nights. In YES the brilliant officials recruited had to keep their minds at home before coming to attend office. The minds were made robotic to only say `yes' to important decisions which involved giving loans. Some never returned and falling under the category of NPA.

The situation above shows that all connected with YES confirmed the policy of saying yes. Nothing in the contrary. Auditors also said yes to the figures of YES and this led to the present crises.Reports state that the promoter of YES enriched out his position in YES. Disclosure norms applicable by the Companies Act, 2013 read with the listing agreement failed to serve any purpose. They existed in paper only. Directors interest concept failed. In this situation it was ignored or purposely suppressed. If the Central Government did not intervene the economy would be in the dole drum. In YES it is reported that the promoter made merry with his friends and relatives by distributing depositors money. The friends failed to return the loans advanced to them and the small depositor of the bank is put in jeopardy. Business has been affected, stock market has a taken a toll and it is not known where it will finally lead to . Will SBI be able to take the burden ? Will it not be affected ?

YES is an example where education did not work . Laws failed. Governance failed. It has proved that degree is of no use unless basic education on discipline, honesty, integrity is honoured. Degrees give short term gains while basic education gives the sustainability the coporate sector is hounding. After YES crises is manged, several laws will be amended but unless the laws arrest the basic factors, the amendments will only bring short term solutions. Governance is not the law alone. Principles of the social organisations like RKM, BSS, YSS are required to be studied. If you speak of governance one needs to only know that RKM did not forget to prepare the accounts of Swami Vivekananda after his death. He was not spared a penny even that he was its mentor. All deductions were made before the money lying in his account was made . The net amount was handed over to his mother as per his last wish. This example is sufficient to set right positions in corporate today. We need no further laws but the education to value the existing ones. The people behind the laws were not without minds. When such laws are bent they do not work. So that the laws are not bent should be the objective.

YES teaches that our education has not given the strength and attributes to a person to say, `NO'.