Well, it's a long shot. First, the capital infusion may prove inadequate and the non-SBI investors may not have the appetite for investing more. Secondly, a bank cannot be run for too long with deposits from public sector banks (the amount of deposits being talked about is Rs 30,000 crore). A public-private partnership to save a private bank is a first of sorts. The outcome will be awaited with interest.
In 1998, a consortium of banks and brokerages rescued Long Term Capital Management (LTCM) by infusing capital on which they later made a modest profit. But LTCM was a hedge fund, not a bank. Here SBI and some private banks will be rescuing a bank that has been a competitor and will remain one if turned around. That's a big difference.
Questions have been raised about regulation and supervision, following the Yes Bank failure. I have not come across any specific lapse that people have ascribed to RBI. They simply presume that if a bank fails, there must be a failure on the part of the regulator. To my mind, the failure happened in September 2018 when IL&FS was allowed to fail. The shocks created then are continuing to take a toll on the financial sector and the economy. In a way, the Yes Bank collapse is the result of the worsening conditions in the economy and in the financial sector consequent to the failure of IL&FS.
More in my article in BS, Question Marks Remain about Yes Bank Rescue. I also joined the Hindu Parley on the subject with Prof Ananth Narayan of SPJIMR
In 1998, a consortium of banks and brokerages rescued Long Term Capital Management (LTCM) by infusing capital on which they later made a modest profit. But LTCM was a hedge fund, not a bank. Here SBI and some private banks will be rescuing a bank that has been a competitor and will remain one if turned around. That's a big difference.
Questions have been raised about regulation and supervision, following the Yes Bank failure. I have not come across any specific lapse that people have ascribed to RBI. They simply presume that if a bank fails, there must be a failure on the part of the regulator. To my mind, the failure happened in September 2018 when IL&FS was allowed to fail. The shocks created then are continuing to take a toll on the financial sector and the economy. In a way, the Yes Bank collapse is the result of the worsening conditions in the economy and in the financial sector consequent to the failure of IL&FS.
More in my article in BS, Question Marks Remain about Yes Bank Rescue. I also joined the Hindu Parley on the subject with Prof Ananth Narayan of SPJIMR
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