YES Bank's Kapoor family repays Rs 4 billion to two mutual funds

Rana Kapoor had said he did not intend to sell his holding in the bank, even after he leaves the bank

Entities linked to one of the promoters of Yes Bank have paid Rs 4 billion to two mutual funds from whom they had raised funds by pledging shares.

The entities are understood to be linked to the close family members of Rana Kapoor, the chief executive and one of the promoters of the bank.

While Rana Kapoor and his family own 10.7 per cent, Madhu Kapur, his sister-in-law and the widow of the 26/11 victim Ashok Kapur and her family, own around 9 per cent in the fifth largest private sector lender.

The Kapoor family paid Rs 2 billion each to Reliance Mutual Fund and Franklin Templeton Mutual Fund, sources said Monday, adding this was a prepayment of the due amount.

With this payment, the overall outstanding of the promoter group's borrowing has come down to Rs 14 billion, they added.

The promoter group entities are understood to have borrowed by pledging shares for investing in other ventures and have paid off once the adequate liquidity was available, they said.

After the Reserve Bank of India (RBI) in September shot down a three-year-term re-appointment of Rana Kapoor as MD and CEO, to January 31, 2019, the share price of the bank has more than halved, which raised concerns among the mutual funds, as the shares were the primary security against which the loans were given and fund houses feared booking mark-to-market losses.

Kapoor reportedly invited the regulatory ire after the bank had under-reported NPAs worth over Rs 100 billion for consecutive years in FY16 and FY17. The monetary authority officially gave no reason for its decision though.

The overall security cover is valued at Rs 50 billion at the current stock price, which is over three times the outstanding, the sources claimed. Though it is not exactly known at what price the shares were trading when they were pledged or when the money was raised.

Kapoor had said he did not intend to sell his holding in the bank, even after he leaves the bank.

A news report Monday said there was no breach of convenants in borrowing against shares done by the promoters/promoter family and added the scrip may witness choppy trade.

The Yes Bank scrip tanked 3.9 per cent to Rs 187.95 on the BSE as against a 1.07 per cent rally on the benchmark, making it the biggest loser on the benchmark and way below the 52-week high of Rs 404.