A special court on Monday extended the Enforcement Directorate’s (ED) custody of Rana Kapoor, founder and former head of YES Bank, till March 20. The ED has alleged that as the bank’s chief executive officer and managing director, Kapoor had sanctioned loans and invested debentures worth ₹30,000 crore out of which those worth ₹20,000 crore are now non-performing assets (NPAs). Under the ED’s scanner are loans and debentures worth ₹5,402.1 crore, issued by YES Bank during Kapoor’s tenure.
The ED is investigating the ₹3,700 crore YES Bank had invested, between April 2018 to June 2018, in short term debentures of housing finance company, Dewan Housing Finance Corporation Limited (DHFL). The bank also sanctioned loan of ₹750 crore to Belief Realtors Pvt Ltd. a subsidiary of a company that is part of DHFL.
According to the ED, Kapoor, who is accused of money laundering, also had a hand in sanctioning a ₹202.1-crore loan to Mack Star Marketing Pvt Ltd, a joint venture of De Shaw group and the promoters of Housing Development and Infrastructure Limited (HDIL), without proper documentation. “Approximately whole amount of loan sanctioned by YES Bank was siphoned off to the HDIL group [of] companies and this amount was used for payment of earlier loan taken by HDIL to YES Bank and the said loans were on the verge of becoming NPA,” the ED told the court.
The loan was for the repair of a building in Andheri, constructed two years ago, for ₹100 crore. Even though the majority of shareholders objected to it, the loan was granted. ED said much of the ₹202.1 crore was used to repay dues and loans to prevent the HDIL account from turning into an NPA. ED also alleged YES Bank provided a loan of ₹400 crore to Avantha Realty and as a kickback, Rana got a lavish bungalow in central Delhi originally owned Avantha. No rent was paid against this property. According to the agency, Avantha had already obtained credit facilities against the bungalow from ICICI Bank and Development Credit Bank (DCB). Avantha’s principal outstanding to ICICI is ₹350 crore and ₹50 crore to DCB. YES Bank allegedly sanctioned a loan of ₹400 crore to Avantha Realty in March 2016 to repay the outstanding loans to ICICI Bank and DCB. “As part of the conspiracy, YES Bank Ltd sanctioned a loan of ₹400 crore to Avantha Realty in March 2016 as Lease Rental Discounting for a period of 10 years. This lease rental agreement was executed on March 22, 2016, just two days prior to the sanction of a loan of ₹400 crore,” reads the first information report filed by the Central Bureau of Investigation.
{{/usCountry}}The loan was for the repair of a building in Andheri, constructed two years ago, for ₹100 crore. Even though the majority of shareholders objected to it, the loan was granted. ED said much of the ₹202.1 crore was used to repay dues and loans to prevent the HDIL account from turning into an NPA. ED also alleged YES Bank provided a loan of ₹400 crore to Avantha Realty and as a kickback, Rana got a lavish bungalow in central Delhi originally owned Avantha. No rent was paid against this property. According to the agency, Avantha had already obtained credit facilities against the bungalow from ICICI Bank and Development Credit Bank (DCB). Avantha’s principal outstanding to ICICI is ₹350 crore and ₹50 crore to DCB. YES Bank allegedly sanctioned a loan of ₹400 crore to Avantha Realty in March 2016 to repay the outstanding loans to ICICI Bank and DCB. “As part of the conspiracy, YES Bank Ltd sanctioned a loan of ₹400 crore to Avantha Realty in March 2016 as Lease Rental Discounting for a period of 10 years. This lease rental agreement was executed on March 22, 2016, just two days prior to the sanction of a loan of ₹400 crore,” reads the first information report filed by the Central Bureau of Investigation.
{{/usCountry}}On August 31, 2017, Avantha received an offer of ₹378 crore from a company named Bliss Abode Private Limited in which Kapoor’s wife, Bindu, is a director. YES Bank agreed to the offer made by Bliss Abode and the property was purchased by Bliss Abode in September 2017. The market value of the property is estimated to be over ₹700 crore. Before the deal had gone through, Bliss Abode had obtained a loan of ₹90 crore from another finance company (on July 13, 2017) against the property in which Kapoor was mentioned as co-borrower.
ED claimed Kapoor was also head of the bank’s management credit committee, which approved the ₹400 crore loan to Avantha and released the property against repayment of loan.
Kapoor’s lawyer Satish Manashinde stated the transactions cited by the prosecution were regular banking practices. He also pointed out that the loan accounts turned into NPAs after Kapoor left YES Bank in January 2019.
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