ED probes Rana Kapoor's role in YES Bank's Rs 30,000-cr bad loans

The special court under the Prevention of Money Laundering Act granted an extension to keep Rana Kapoor under custody till March 16

The special court under the Prevention of Money Laundering Act (PMLA) granted an extension to the Enforcement Directorate (ED) to keep Rana Kapoor under custody till March 16.

The ED had sought extension of Kapoor’s custody to probe his role in YES Bank’s bad debts of Rs 30,000 crore. It will also look into whether the monies were “siphoned and laundered” to the 78 entities controlled by the bank’s co-founder.

“It has been noticed that more than Rs 30,000 crore was given as loans by YES Bank to several companies/entities during the tenure of Kapoor in YES Bank which have converted into bad debts. Kapoor is required to be interrogated to ascertain if, in the guise of these loans, the monies have been siphoned and laundered,” the ED said in its remand application to court. 

The ED added that it was probing loans of over Rs 20,000 crore from the point of view of irregularities, quid pro quo and diversion.

Investigation has revealed that about 78 companies owned by Kapoor’s family members were being controlled and managed by Kapoor. The ED said, “Documents related to these companies/ firms are to be obtained,” and added that Kapoor would be confronted to ascertain siphoning off of funds from YES Bank to these companies. The ED named Kapoor, his wife Bindu and three daughters — Roshini, Radha and Raakhe — as accused in the matter.

Giving detailed analysis of each transaction, the probe agency said that prima facie there appears to be a generation of proceeds of crime to the tune of thousands of crores by the accused in this case. 

“The said monies have been acquired, concealed and projected by the accused persons to claim the same as untainted,” the application said. Earlier, the ED had quoted Rs 4,300 crore as proceeds of the crime while seeking custodial interrogation of Kapoor in the same court on March 8.

In picture: Rana Kapoor’s daughter Roshini. Photo: Kamlesh Pednekar

This was an initial estimate based on the material in the shape of a statement and seizures made during the searches in the case, said an ED official, adding that Kapoor was suspected to have entered into such deals through a complex web of companies. Of YES Bank’s total loans of about Rs 2.25 trillion, around Rs 42,000 crore may have turned non-performing assets, the official estimated.

While seeking Kapoor’s further custody, the ED said it was required because Kapoor is not co-operating with the investigation authorities and has not yet provided the required information regarding proceeds of the crime. “Sustained interrogation is required to unearth the trail of funds, and if further custody is not granted, it may hamper the ongoing probe,” it said.

It further said that Kapoor is being required to confront other persons whose statements will be recorded in the next few days. “He is also required to trace the end use of the huge amount of monies which appears to have been laundered,” ED noted. The ED expects Kapoor to reveal crucial facts which are in his exclusive domain, as he was the key person, deeply and directly involved and in-charge of affairs of the bank.

 

Rana Kapoor’s wife Bindu at Enforcement Directorate office in Mumbai on Wednesday. Photo: Kamlesh Pednekar

Kapoor’s counsel argued that his client cannot be held responsible for the mess created by the new management (under former MD and CEO Ravneet Gill). Kapoor claimed that the bank’s market capitalisation reduced to Rs 5,000 crore from Rs 93,000 crore after his resignation.

According to ED officials, the central agency is also probing role of the YES Bank co-founder in connection with the disbursal of loans to some corporate entities and subsequently alleged kickbacks reportedly received in his wife’s accounts.

The ED has found that YES Bank had bought debentures of Dewan Housing Finance worth Rs 3,700 crore while the latter gave a loan to a company owned by Kapoor’s daughters of Rs 600 crore.

Both the transactions were suspicious as the company owned by Kapoor’s daughters did not have sufficient businesses or assets. Also, the mortgage shown for the loan was only a property worth around Rs 40 crore. The property mortgaged was an agricultural land shown as residential land with its worth inflated, the ED said.