Veteran bankers Deepak Parekh and Uday Kotak said they will cooperate with the ongoing efforts to keep the financial system safe, but stopped short of committing to participating directly in the Yes Bank Ltd. rescue plan.
“Being a large player in the financial sector, we have to co-operate, we have to support, we have to help,” Parekh, long-time chairman of largest mortgage lender HDFC Ltd., told CNBC-TV18. The nature of the cooperation will depend on the final contours of the plan that's been worked out, he said.
It depends on the quantum, because we can't really put a large sum of money into another bank. We also need money for our disbursements. But we want to be helpful, we want to be co-operative. So it depends on the size and the amount.Deepak Parekh, Chairman, HDFC
There could be a preferential or rights issue at Yes Bank, and “some of us” may be invited to be part of the issue, Parekh added, without disclosing further details.
Kotak, the billionaire head of Kotak Mahindra Bank Ltd., also promised cooperation saying, “We are an integral part of the Indian financial system. But what we would do in a specific situation would depend on data, facts and value to our stakeholders.”
India seized control of Yes Bank on Thursday night, capping withdrawals for a month citing a steady decline in its financial position. That caused panic among depositors as they lined up outside the bank's ATMs. Stocks led by banks tumbled on Friday with Sensex and Nifty 50 falling more than 2 percent. Yes Bank plunged as much as 85 percent before recouping some losses. Market veterans said an early resolution for Yes Bank is crucial to avoid a systemic risk.
State Bank of India is already considering an investment in the struggling lender, according to its filings. The confirmation came after Bloomberg reported on Thursday that the government approved a proposal to allow a consortium led by India's largest bank to invest in Yes Bank.
This morning, RBI Governor Shaktikanta Das told reporters that there'd be “very swift action” from the central bank to revive Yes Bank.
30 days is the outer limit; you will see very swift action from RBI to put in place a scheme to revive Yes Bank.Shaktikanta Das, Governor, RBI
Here are the other highlights from the CNBC-TV18 interview:
Deepak Parekh
- Panic in the market is unnecessary
- Don't expect the moratorium to last until April
- Foreign investors want SBI/LIC to lead the Yes Bank rescue
- Yes Bank can be revived if capital is brought in
- If the RBI and the government had not taken this decision, there would have been a run on Yes Bank on March 14
Like IL&FS, Yes Bank was a disaster waiting to happen. It was clear that some of the loans wouldn't have come back. It had to blow up.Deepak Parekh, Chairman, HDFC
Uday Kotak
- Will fully cooperate to keep the system safe
- Believe RBI will have a gameplan in place for Yes Bank
- Confident of seeing a draft plan on Yes Bank
- Confident RBI legal action will protect depositors
- Not been approached yet on investing in Yes Bank
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