Nirmala Sitharaman's statement came a day after the RBI imposed a moratorium on troubled private lender Yes Bank and capped the withdrawal limit at Rs 50,000.
The Reserve Bank of India RBI had been aware of the "governance issues and weak compliance" in Yes Bank as the apex bank had been continuously monitoring and scrutinising the lender since 2017, Union Finance Minister Nirmala Sitharaman said on Friday.
Sitharaman said investigative agencies and SEBI noticed malpractices by top executives of Yes Bank in March 2019.
"YesBank lent money to some of the very stressed corporations like Anil Ambani Group, Essel, Dewan Housing Finance Corporation (DHFL), Infrastructure Leasing & Financial Services Limited (IL&FS) and Vodafone," she said.
Her statement came a day after the Reserve Bank of India imposed a moratorium on troubled private lender Yes Bank and capped the withdrawal limit at Rs 50,000 owing to the financial position of the bank.
"Since 2017, RBI has been continuously monitoring and scrutinising Yes Bank. It noticed that there were governance issues and weak compliance in the bank. There was a wrong asset classification together with risky credit decisions," Sitharaman said at a press conference where she addressed the crisis.
Sitharaman said she has asked the RBI to assess what has caused these difficulties for the private lender and clearly identify the roles played by various individuals in creating the problem and not addressing it.
I have asked RBI to act so that the due process of law takes its course with a sense of urgency, she added.
She assured depositors that the government is committed to ensure that depositors' interests are safeguarded.
"I want RBI to ensure that due process of law is set to roll with a sense of urgency so that we should find out as to who led to the problem of this size and magnitude," she said.
Meanwhile, the RBI has announced a draft scheme of reconstruction of the Yes Bank and has invited suggestions and comments from members of public, including the banks' shareholders, depositors and creditors for the same.
The Finance Minister said that the RBI has assured that the reconstruction plan will come into play within the moratorium period. The SBI has expressed willingness to invest in Yes Bank, she said.
She assured that deposits and liabilities will not be affected.
Employment and salaries have also been assured for at least one year.
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