The Banker Who Crushed His Diamonds by Furquan Moharkan (read novel full txt) 📕

In fact, it is now being said that it was the RBI that got him to come back to India by saying that they would try making him the chairman of the bank. ‘Pyaar se laana pada usse (We had to get him back with love). It was a neat and clean operation by the RBI,’ two insiders who knew about this operation told me.

On 13 February, Moneylife reported that most respected names in the financial world had proposed a public–private bailout of YES Bank as a last resort to RBI governor Das. Under this proposal, some of the leading banks, including ICICI Bank, HDFC Bank and, maybe, Kotak Bank, Axis Bank and others, would chip in Rs 2000 crore each, with a seat on the board and a commitment not to withdraw funds for at least two years. This solution also involved the SBI bringing in Rs 5000 crore on similar terms. A month later, call it indecisiveness or policy paralysis, an action based on similar lines was taken. If I, as an outsider to the system, knew way before the run on the bank (in September 2019) that it was unable to raise funds, it is beyond my comprehension that the regulator didn’t know.

Had the RBI and the government acted at that time, the need to put a moratorium over deposits would have easily reduced. In September 2019, there was no run on the bank. The heavy withdrawals started only in October.

A moratorium was placed on withdrawals from the bank on 5 March, when the RBI assumed control of the bank — a move seen as a bid to temporarily plug the run on the bank. But the RBI had acted after the bank had seen a further deposit-base erosion worth Rs 28,200 crore in the two months after it was alerted about serious solvency issues at the bank. On the day the RBI took control of the bank, a senior RBI official told me: ‘We can’t even wait till 14 March, when YES Bank would declare the results.’ The RBI’s action reminds me of a Kashmiri phrase ‘gryeki wizzi noon traawan’, which translates into ‘adding salt to the curry when it’s receiving the final boiling’. In Kashmiri cuisine, which uses a lot of meat, the salt is added at the initial or middle stage of cooking so that the meat also absorbs some of it. In my childhood days, when I used to prepare for exams on the last day, my mother used to address my way of studies using this phrase.

In its annual results announced in May, the bank, under the new management, said that ‘most’ of the charges by Agarwal were unsubstantiated. It also hinted that there were some charges that were substantiated, but stopped short of disclosing any further information. ‘In January 2020, the then chairman of the audit committee of the bank highlighted certain concerns around corporate governance and other operational matters at the bank. The then board decided to get this investigated by an independent, external firm. A preliminary report has been received by the board. While most of the allegations are unsubstantiated, the board has requested the external firm for detailed recommendations highlighting areas where corporate governance can be further strengthened,’ it said in an annual filing.

Remember that earlier in the book we had talked about Ravneet’s mentor Anshu Jain? It was around this time Anshu came into the picture.

YES Bank, on 5 February, was reported to have appointed the Anshu Jain-headed global investment bank Cantor Fitzgerald and two domestic entities for its fund-raising plans. While this is what appeared in the media, Anshu had been working with YES Bank since the December 10 board meeting. He was brought on board before the furloughs in US. However, anything from him wasn’t materializing because Ravneet was spellbound by the $1.2 billion offer by Erwin Singh Braich. After all, it is understandable since such a big sum was involved. Other merchant bankers appointed by the capital-starved lender included IDFC Securities and Ambit Capital.

Ironically, Anshu Jain was appointed as the merchant banker for yet another troubled private sector lender, Lakshmi Vilas Bank. This bank ultimately had a similar fate like that of YES Bank — it had to be bailed out in November 2020.

Coming back to YES Bank’s dying days, on 22 January I had got a press note from the bank about a new deposit scheme. I sniffed something fishy. Why was the bank, which was staring at a collapse, offering a higher interest over the deposits? I called up the executives who had alerted me about the run on the bank. ‘They are trying to buffer up the deposit base,’ they said. The sources told me that the bank had witnessed withdrawals worth Rs 42,000 crore in the December 2019 quarter.

However, as there was no document supporting this story, I held my horses. In the second week of February, I got my hands on these letters, confirming my story. I sent a mail to the bank about this by 7 February, which they acknowledged only after a follow-up mail twenty-four hours later. Given that I was certain about the story, the bank’s public relations team tried every trick in the book to stop it. Since the bank was not responding to my queries, I called up Ravneet Gill on the evening of 9 February to seek his comments. A clearly shocked Ravneet told me: ‘I don’t know where you got this information. I will have to check it,’ before disconnecting the call abruptly. Rather than addressing the issue, the CEO of the bank was more worried about how the information about the bank’s bad health had become public.

At the grass-roots level, the word had spread among the lower-level employees. I spoke one of the many depositors at the bank, trying to gauge the mood. His account of things went like this:

‘For a long time, the experience with the bank had been good. The bank employees