‘Rana Kapoor ignored advice on DHFL deal’
Former Yes Bank managing director and chief executive officer Rana Kapoor not only took undue personal interest in risky investments in Dewan Housing Finance Limited (DHFL), but also ignored warnings from the treasury and risk management teams of the private bank, resulting in huge losses, according to the latest charge sheet by the Central Bureau of Investigation (CBI).
For example, when DHFL, run by Dheeraj and Kapil Wadhawan, was looking to raise funds from the market but unable to find an investor, Yes Bank’s investment and financial markets committee headed by Rana Kapoor approved on April 5, 2018, a proposal for investment of ₹1,000 crore in Unsecured Redeemable Non-Convertible Subordinate Debentures.
“Investigation revealed that Rana Kapoor had shown undue personal interest in aforesaid investment and took premeditated decision of investment without discussing the matter with concerned officials of Yes Bank, who were having adverse view against such investments,” said the supplementary charge sheet filed by CBI on July 13. The charge sheet was made public only late last week and has been reviewed by HT.
CBI and ED are investigating loans issued by Yes when Rana Kapoor was its MD and CEO (till January 2019) that have turned bad. They believe that these loans were issued against kickbacks to Kapoor and his family that were then laundered.
The CBI and ED filed their first chargesheets in the Yes Bank probe in June and May, 2020, respectively.
Kapoor is currently in Taloja jail in Mumbai.
According to the charge sheet, DHFL contacted treasury officials of Yes Bank with a request for an investment of ₹1,000 crore but they demurred in view of the low demand of DHFL bonds in the market. DHFL also reached out to other banks including IndusInd Bank and Axis Bank etc for investing in its subordinate bonds, but these banks didn’t respond.
Similarly, another memorandum of approval of investment in the masala bond (bonds issued outside India but denominated in Indian currency) of DHFL for $50 million ( ₹368 crore) was approved by the investment committee headed by Rana Kapoor on April 6, 2018.
The CBI charge sheet said Yes Bank’s treasury officials advised Rana Kapoor against investing in the masala bonds as demand was lower than the issue size but that he ignored them.
The agency claims Kapoor had also misled the Board Credit Committee (BCC) of the bank through a false declaration on May 17, 2018, as part of a criminal conspiracy to enhance the exposure limit of DHFL from ₹2,100 crore to ₹4,000 crore. As a result, BCC approved investment of ₹2,000 crores and ₹700 crore respectively in a public issue of non-convertible debentures of DHFL.The charge sheet adds that the investment team of YES Bank advised Rana Kapoor not to invest in the public issue.
In another instance, Kapoor approved and disbursed a loan of ₹750 crore in June 2018 for Wadhawan’s Bandra Reclamation Project, in which the Risk Management Team of Yes Bank pointed out multiple risks.
CBI says the Kapoors were paid huge bribes by DHFL in lieu of favours extended by the bank. The agency alleges that a total of ₹600 crore was paid in the form of investment by DHFL in companies linked to Kapoors.
In one such instance, Rana Kapoor himself forged the signatures of his daughter Radha Kapoor Khanna, who is a director in DOIT Urvan Venture (India) Pvt Ltd, in a letter addressed to DHFL requesting an enhancement in the mortgage loan facility on a property owned by that company from ₹300 crore to ₹600 crore.
Enforcement Directorate (ED) has pegged the size of the Yes Bank scam at ₹5,050 crore and alleged funds were siphoned off using a complex web of at least 100 shell companies.
ED alleges that loans worth around ₹30,000 crore, given when Rana Kapoor headed the bank as its MD-CEO till January 2019, have turned into bad loans and out of these, ₹20,000 crore have become NPAs (non-performing assets).
ED has so far attached assets worth ₹2,400 crore in the case including around ₹900 crore belonging to Kapoors and ₹1,411 crore linked to Kapil and Dheeraj Wadhawan of DHFL.
Kapoor’s lawyer Vijay Aggarwal did not comment on the chargesheet. HT reached out to Wadhawans as well but there was no response.