Yes Bank founder’s shell firms, Rs 2K cr investments under ED lens; CBI files FIR
The Enforcement Directorate (ED) on Sunday arrested Yes Bank’s founder and former chairman Rana Kapoor (62) on charges of money laundering. The arrest, under the Prevention of Money Laundering Act (PMLA), comes after 30 hours of intense questioning. Kapoor is accused of receiving kickbacks from various corporate entities on disbursal of loans and mismanagement in the operations of the private bank.
The ED produced Kapoor before a holiday court in Mumbai which remanded him in the probe agency’s custody till March 11. He was arrested by the ED around 3 am on Sunday as he was allegedly not cooperating in the probe. The ED is also recording the statement of Kapoor’s wife and daughters.
Meanwhile, the CBI has begun a probe into the Yes Bank affairs as officials started collecting documents in the matter. According to CBI sources, the agency is looking into aspects of alleged criminal conspiracy, cheating and corruption. The sources refused to elaborate on the nature of the probe — preliminary enquiry or an FIR — or people arraigned, but affirmed that a formal investigation has begun. The relations between the scam-hit DHFL and Yes Bank are understood to be under the scanner of the CBI with some questionable financial transactions involving a third company, sources added.
The ED contended before the court that Yes Bank bought debentures worth Rs 3,700 crore of DHFL. In lieu of the same DHFL sanctioned a Rs 600 crore loan to DoIT Urban Ventures Pvt Ltd, a company in which Kapoor’s daughters are directors. The said loan was given without adequate collateral.
“DHFL’s Kapil Wadhawan and Kapoor entered into a criminal conspiracy to defraud public money,” ED counsel Sunil Gonsalves contested before the court. The agency has pegged the proceeds of crime in the case at Rs 4,300 crore. The ED told the court that role of some companies run by Kapoor’s family members needs to be established and they need to confront all these people with the accused.
According to a PTI report, the investigating agency is probing the source of funds which were used by the family members of Rana Kapoor to acquire assets in London. The report added that under investigation are investments over Rs 2,000 crore, 44 expensive paintings and a dozen alleged shell firms. Kapoor sold almost all his stake in YES Bank in November last year but for 900 shares. This came after the YES bank co-founder had boastfully declared that he would never sell his share in YES bank and that “diamonds are forever”. Authorities also recovered some documents that indicate that Kapoor’s family has assets in London, which is now under the Indian agency’s scanner.
Meanwhile, allaying concerns raised by many after Yes Bank fiasco, the RBI on Sunday reiterated that depositors’ money is safe and it is closely monitoring all banks. “Concern has been raised in certain sections of media about safety of deposits of certain banks. This concern is based on analysis which is flawed. Solvency of banks is internationally based on Capital to Risk Weighted Assets (CRAR) and not on market cap,” the central bank said in a tweet.
“RBI closely monitors all the banks and hereby assures all depositors that there is no such concern of safety of their deposits in any bank,” its second tweet said.
During the hearing, the defence lawyer, however, said Kapoor has been selectively targeted by the ED and he is cooperating with the probe agency. “We are ready to cooperate and submit all the documents that the agency wants. I have fully cooperated with them,” Kapoor said in the court. Kapoor was one of the fastest self-made billionaires. Kapoor stated in the court that the DoIT company is in name of his two daughters — Radha Kapoor and Roshni Kapoor. Yes Bank had given around Rs 3,700 crore loan to triple-A rated DHFL company, and later about Rs 600 crore was borrowed by DoIT Company from DHFL, he said.
The DoIT company is still repaying the loan and it is not an NPA (non-performing asset), Kapoor said. “From the last few days I was not well, hence my family members took me to Breach Candy Hospital, but still I am cooperating with the ED,” he told in the court.
However, the ED told the court that it wants to conduct a through investigation and “many people are under the scanner”.
The crisis began to unfold after the Reserve Bank of India (RBI) noticed under-reporting of NPAs by the bank. The banking regulator cut short Kapoor’s tenure to January 31, 2019. The ED began action against the banker by raiding his upscale residence in south Mumbai on Friday and is investigating Kapoor, his wife and three daughters over a Rs 600 crore fund received by a firm allegedly “controlled” by them from an entity linked to the scam-hit Dewan Housing Finance Limited (DHFL).
Meanwhile, Indiabulls Housing Finance on Sunday said Yes Bank owes Rs 662 crore in the form of bonds to the company and it has no term loans outstanding from the lender. “We wish to inform that Yes Bank owes to Indiabulls Housing Finance Rs 662 crore via additional tier 1 (AT-1) bonds,” it said in a regulatory filing. The investments in AT-1 bonds of Yes Bank were made in 2017, as part of its treasury management of over Rs 20,000 crore of cash and when the bank was worth over $10 billion in value, it said. “Indiabulls Housing Finance has no term loans outstanding from Yes Bank,” it said.