Arvind Gupta, the 65-year-old whistle-blower who exposed the ICICI Bank-Videocon quid-pro-quo deal in 2016, thinks there is no comparison between the Yes bank scam and the ICICI Bank case. The ICICI Bank case involved its former CEO, Chanda Kochhar, her husband Deepak Kochhar and Videocon Group’s Venugopal Dhoot.
While Gupta has high praise for the government for acting quickly to make the Yes Bank rescue a success, the shareholder activist feels that the Reserve Bank of India (RBI) should have acted much earlier in the Yes Bank case considering the nature of the case. Gupta shared his views with Moneycontrol on the Yes Bank case.
Q: How you look at the events that led to the Yes Bank bail out?
A: This was coming. The writing was on the wall for long for Yes Bank. But, the way the Yes Bank problem has been handled by the government very prudently, I’m very happy. The government has infused so much money and is on a firefighting mode to avert the disaster. We must give due credit to the government. They did a wonderful job.
Q: Did the RBI act late?
A: In our system, the RBI intervention is pretty slow in such cases. They have to be very vigilant and alert to take prompt action. Instead, they are just sitting on this issue taking their own time. RBI has been very casual in the Yes Bank case. It has to become more responsible. In times to come, when the private sector is going to be the dominant Indian banking sector, the RBI should really tighten its belt to respond on an emergency basis. They should not act with a typical bureaucratic mindset.
Q: What is lacking in the RBI supervision department? Is it the infrastructure or intent?
A: I think it is the mindset. They have the best brains but they take too much time to respond, sometimes two to three years to form an opinion on a crucial issue and act. They have to become bold central bankers.
Q: Do you think, had the RBI acted early, the cost of rescue would have been much lower?
A: I fully agree. Not only cost of the rescue, but much of the losses of the bank could have been averted. Had potential investors put in the money, things could have been different. The dirty things that has been going on in Yes Bank management would not have happened. That’s what I said, it’s time for the government and the RBI to settle down and look into all those things. Unless banks are made to run in a proper regulatory environment, such incidents will happen again.
Q: How do you compare Yes Bank events with the ICICI Bank case?
A: It is much worse than the ICICI Bank-Videocon case. ICICI was a case of selective misuse of power. In Yes Bank’s case, the promoter and the top executives, I’m told, were hand in glove. It was a mass scale diversion of funds. Yes Bank was a systematic collapse. The entire system was rotten. ICICI, barring a few incidents, is an excellent organization. There is no comparison between ICICI and Yes Bank.
Q: Is the promoter-driven banking model require a review?
A: Yes. Giving a licence to a private entrepreneur to run a bank and assuming all is well is not the best course of action. In recent times, the RBI too have gone out of the way to help promoters. In one bank’s case they have allowed individual promoters to retain 15 percent of the stake. You should offer a level playing field for all.
Q: Will you look at the Yes Bank case details?
A: I don’t have a locus to intervene in this case. I had some shares of Yes Bank earlier, which I sold. Unless I have a clear motive, it doesn’t make sense (to raise the issue). In the ICICI Bank case, I was a shareholder. I don’t want to become an instrument in anybody’s hand.