The 1992 Harshad Scam was called the ‘stock market scam’ – that’s a huge mistake. It was a banking fraud. It was the bank’s money that got misused. It got used in the stock market. This was allowed to happen because the Banking regulator did not (does not) allow a secondary market in debt instruments to be developed.

Even today 90% of the debt market problems can be traced to the fact that we do not have a secondary market in debt instruments. If Adag and Zee had borrowed money from the secondary debt market, the losses would have been spread over a larger number of players. Also the market has far better information than one player.

Who really benefits in a bail out which is not market driven, but regulator driven? Well the shit that has to be hidden can be kept hidden. So SBI was NOT arm twisted by the RBI (which failed to monitor YesBank, and we all knew it). SBI did not arm twist other banks (so called private sector, but not having a single promoter, so for all practical purposes, public sector and foreign owned banks), and only one private sector bank (Kotak) into investing in Yes Bank. Most of them have invested “blind” (teen patti) into YesBank – and they may have mentally written off the amount. No person who could apply his mind into the transaction came in as an investor – Rakesh Jhunjhunwala is one name which all of us know. I know one FII investor who walked away, but I am not at liberty to name him.

Clearly this is not a Yes Bank bail out. It is a bail out of all lenders (other than Tier 1 bond holders, who have of course gone to court). So the greedy deposit holder, the greedy employee (who left better banks to come here for a higher salary or Esop, or a bigger territory), etc. got bailed out. Adag which owes Rs. 12000 crores, Zee which owes Rs. 8000 crores got bailed out. Strictly speaking this “bail out” saves these transactions from the court’s scrutiny. All the “investors” in YesBank (who paid Rs. 8 premium on a Rs. 2 share) have just “accepted” the balance sheet as a given. One of the big 4 will again do the audit. Anybody who has been in the financial services business long enough knows how Adag and Zee would have got these loans – Remember both these names were (are) mud – since 2016 at least. Most of us knew what shit Adag, Zee and Yes Bank was. Of course some fund managers did not know and some managers choose not to know. You can decide which fund manager is in which bucket. My respect for some of those fund houses has tumbled faster than the Sensex. When I want to give my money I am of course looking for integrity, but I am also looking for people with an ear to the ground and some elementary competence. I am fuming. Right, fuming.

So the government comes out with a hair brained “restructuring” scheme (much lauded by  everybody) where a bunch of shares that can’t be traded is rigged for a promoter to sell (Madhu Kapoor sold a big chunk of her shitty shares). How can a company with zero tradeable shares be listed and called “traded”? Beats me.

Remember Yes Bank was a part of the Indices – so any fund house holding that has to write off those shares – hey Index funds will have a huge tracking error – the Sensex and TRI can afford to drop the shares, but the fund manager cannot do anything about this shit. It still stays listed. I am wondering whether Ravneet Gill could have come out with such a solution.

Ravneet Gill and team will find a job elsewhere but a lot of people in Yes Bank will run away because they may not be able to work under SBI. In fact many of us would be suffocated working in SBI environment. I do not think any banker from Hdfc, Icici, Axis, Kotak would happily join Yes Bank. If they do, I would be shocked and suspicious. Oops I am built that way.

With so much negativity will YesBank really be able to fight and live for another day? Under the able guidance of SBI?

Let me quote..I was in the cabin of an ED of one of the SBI related entities. The head of sales/marketing / client acquisition – the No. 1 man in the Marketing and Sales team walked in. We were introduced. He said “Sir we should do a lot of training for our sales team selling to HNI”. I said of course.

As soon as he left, the ED asked me to shut the door. He asked me to latch it. Then he spoke to me in his mother tongue and said “No HNI does business with us VOLUNTARILY” SO do not get carried away, I will not give you any training work. Our mis-selling is going on fine – and I do not want to disturb that. Lol. he is no longer working for SBI of course. Hence this story has been put up!! Now I can name him!

If I were a Tier 1 bond holder I would fight right up to the Supreme Court. I do not think that all the NPA have been written off. This bank has no great capacity to do decent appraisals. I would not mind buying the share at Rs. 10. I guess the retail shareholders will not come in too soon. Personally I would stay away.