New Delhi: State Bank of India (SBI)’s decision to invest in beleaguered private sector lender Yes Bank was not purely a commercial decision, other factors like ensuring the stability of the financial system also had a role to play, SBI Chairman Rajnish Kumar said Thursday at the digital edition of ThePrint’s Off The Cuff.
In a conversation with ThePrint’s Editor-in-Chief Shekhar Gupta, Kumar also said that there was no hope for revival of Jet Airways with domestic regulations making it difficult to find investors.
The SBI chief also said the telecom sector emerging out of the payments crisis will be stronger.
‘Depositor confidence returning in Yes Bank’
Asked about SBI’s move to pick up a 48 per cent stake in Yes Bank, Rajnish Kumar said the decision was not purely a commercial decision.
“Was it purely a commercial decision, and State Bank saw a great opportunity and went and said I have to acquire Yes Bank? It was not a decision like that. It was a decision made in the larger interest of the stability of the financial system and being the leading bank in the country, we had to take that step,” he said.
Along with private sector banks like ICICI Bank, Axis Bank and Kotak Mahindra Bank, SBI stepped in earlier this year to prevent Yes Bank from going under.
The current arrangement rather than Yes Bank’s merger with SBI was a better way of saving the bank, keeping its franchisee strong, and retaining the bank in the private sector, Kumar said, pointing out that if the Reserve Bank of India wanted, it had the powers to order a merger.
“Yes Bank will stabilise and commercially it may prove to be a good decision. But I don’t want to make that statement today. I want to reserve that for three years from now,” said Kumar, adding that the bank’s book cleaning has happened.
Depositors have withdrawn money, but their confidence is returning if one looks at the April numbers, he said. “It will take time for the bank to repair its losses. Yes Bank can be stabilised in the next one year,” he added.
Also read: Yes Bank’s top priority is to get fresh deposits, new CEO says
Jet Airways situation worse after Covid-19
Speaking about bankrupt carrier Jet Airways, Kumar said the airline was finding it difficult to find a buyer even prior to the Covid-19 pandemic, but the situation has worsened now.
“Jet Airways was finding it difficult to find a buyer. In the current circumstances, even if there was a little ray of hope, even that is gone. It was an airline that could have been saved and that was the reason we put in so much effort. There are certain laws and regulations in the country and because of these, the investment in Jet Airways could not happen,” he said.
In April last year, Jet Airways became the second major airline to stop operations after Kingfisher Airlines as a massive cash crunch and pile up of debt forced the exit of founder and chief executive Naresh Goyal.
Lenders were forced to initiate bankruptcy proceedings this year after failing to find any buyers for the airline. A consortium of Indian banks had an exposure of around Rs 8,500 crore to the airline.
‘Three firms in telecom sector’
Rajnish Kumar was also confident that the telecom sector will emerge stronger after the crisis arising out of payments calculated based on a new definition of adjusted gross revenues.
Indications are that both the citizens and the government want three telecom firms to continue, he said, referring to Reliance Jio, Airtel and Vodafone-Idea.
The SBI chief also talked about the success of the Insolvency and Bankruptcy Code (IBC) and how banks have recovered most of their debt to firms like Essar Steel through successful resolution.
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