ED raids Suraksha ARC, realty firms as part of YES Bank loan probe

The Enforcement Directorate on Tuesday raided 17 locations in Mumbai, Khandala and Delhi linked to Suraksha Asset Reconstruction Company Ltd (SARCL), Suraksha Realty Ltd and Khyati Realtors Pvt Ltd. The raids focused on the companies’ promoters, directors, employees, and a former YES Bank official as part of a money-laundering investigation into suspected irregularities in loan assignments and corporate insolvency processes.

Officials said the investigation is examining the suspected fraudulent granting of loans by YES Bank, particularly to Mackstar Marketing Pvt Ltd, as well as other advances made in 2016-17 and 2017-18. Investigators are checking whether these loans were improperly assigned to asset reconstruction companies through circular transactions, which may have enabled the takeover of stressed assets at low prices.

The raids also aim to find evidence of inflated claims and a lack of transparency in the Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code. ED teams took documents, financial records, and digital data from the sites. No one has been arrested yet. The agency is reviewing the roles of company officials and the former bank employee in the loan assignment process.

This investigation follows ongoing scrutiny of YES Bank’s lending practices during the time Rana Kapoor was in charge.

Reports say YES Bank extended about `202 crore in loans to Mackstar Marketing Pvt Ltd, allegedly used to move funds linked to the HDIL group. These loans were later transferred to Suraksha ARC. Special audits and earlier investigations have pointed out governance issues, possible round-tripping of funds, and early transfers of assets to ARCs. Similar problems have come up in other cases where Suraksha ARC acquired YES Bank’s stressed loans. Suraksha ARC, led by industrialist Sudhir Valia, is registered with the Reserve Bank of India. Suraksha ARC buys non-performing assets from banks and seeks to resolve them through restructuring or insolvency proceedings. Asset reconstruction companies like Suraksha often act as financial creditors in insolvency cases.