Hindu The importance of reading editorials of reputed newspapers is not hidden from anybody. What causes obstruction are difficult words which act like speed-breakers forcing you to either refer to a dictionary for its meaning or to simply guess its meaning.


While getting the meaning from the dictionary is the best way to understand it, sometimes a dictionary is not within your reach. Also, a number of aspirants get confused when they see more than one meaning next to a word in a dictionary. It becomes a difficult process for them to pick the relevant meaning.

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We at PracticeMock understand this and that’s why we have come up with a series of Editorials’ Difficult Words where we shortlist the important editorials of the day and pick the difficult words/phrases therein. Next to the word, we put only the contextual meaning so that you don’t get confused. Let’s check out today’s editorial which is on “YES Bank crisis has exposed serious regulatory and supervisory lapses“.

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YES Bank crisis has exposed serious regulatory and supervisory (role of observing & directing an activity) lapses (temporary failure)

Signs of trouble were visible as early as in 2017 when the bank became a casualty (something that is badly affected by an event) of the RBI’s annual risk-based supervision and declared significant divergence (two things becoming different) in bad loans pertaining to FY16

Could YES Bank’s catastrophic (sudden harm/destruction) end — the private sector bank that was once the darling of the market, and is currently the custodian (an organization that is responsible for protecting, caring for, or maintaining something) of nearly ₹2 lakh crore of public deposits — have been avoided? As far back as in May last year, the RBI used its power and appointed R Gandhi, former deputy governor, as additional director on the board of YES Bank. The appointment followed the bank’s disastrous (extremely bad) performance in the March quarter, when it posted a loss of ₹1,500 crore and saw a nine-fold increase in provisions. But almost a year later, the regulator’s rescue plan has left small savers bearing the brunt of regulatory and supervisory acts of omission and commission.

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Signs of trouble were visible as early as in 2017 when the bank — which emerged unscathed (without any damage) from the RBI’s asset quality review exercise in 2015 — became a casualty of the RBI’s annual risk-based supervision and declared significant divergence in bad loans pertaining to FY16. A few months later it reported much steeper bad loan divergences pertaining to FY17. With the bank reporting huge divergences of ₹4,176 crore and ₹6,355 crore for these fiscals, corporate governance issues and the fast deteriorating asset quality had set off alarm bells among investors and analysts. A year later the RBI asked Rana Kapoor (who sold his entire stake in YES Bank by the end of 2019) to step down from his CEO position.

The entire sequence of events is akin to a badly scripted play that could only end poorly. Yet the regulator dragged its feet (be deliberately slow or reluctant to act) and remained a silent spectator to the endless charade (an act or event that is obviously false, although represented as true) put up by the new management of seeking to raise capital from several investors. Paying heed to the repeated calls from various market players and stakeholders over the past year to step in, could have saved the RBI from the embarrassing position it finds itself in now. Importantly, the Indian financial system could have been spared yet another turbulence (state of confusion) that could cost dearly this time.

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The regulator and auditors have some serious questions to answer. YES Bank is the fifth crisis that has hit our financial system — after PNB, IL&FS, DHFL and PMC Bank — in just two years. Despite numerous audits and inspections by the regulator, every crisis that has unfolded throws open huge gaps in the supervisory and audit processes. It also raises questions over the murky (morally questionable) role of auditors in the entire episode, much like in the PNB scam.

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The bank’s board — of both professional and independent directors — has also clearly failed to safeguard shareholder interests. The RBI on its part will have to critically introspect its audit and inspection processes. After all, the buck has to stop somewhere. In the ongoing reconstruction and SBI’s attempt to rope in other investors to salvage (to try to make a bad situation better) YES Bank, the RBI will have to be quick and transparent. Restoring the faith of small savers will be a tall task hereon.

News Reporter