The Enforcement Directorate (ED) registered a money laundering case against the founder and former managing director of Yes Bank Ltd, Rana Kapoor, and raided his Samudra Mahal residence at Worli, Mumbai, in connection with the loans granted to DHFL (Dewan Housing Finance Ltd).
This comes after the RBI recently issued a moratorium against the private sector lender on account of failure to raise capital and address potential loan losses in the wake of deteriorating financials of the bank. It also suspended the bank's board for 30 days and capped withdrawal limit for its customers at Rs 50,000 for a period of one month.
Delving into details
The government had asked RBI to notify about any alleged financial irregularities that contributed to the deteriorating financials of the bank and submit a detailed assessment report. The probe is being conducted under the Prevention of Money Laundering Act (PMLA) intended to collect more solid evidence on the matter.
The PMLA case registered by ED is on the basis of continued investigation on Kapoor's loan sanction against DHFL, wherein it found fund diversion of around Rs 12,733 crore to 80 fictitious entities using one lakh fictitious customers in 2015.
The ED official said, "In some cases, it found that the funds diverted to DHFL were originating from Yes Bank." The searches are conducted to ascertain the nature of these loans and if there were any irregularities observed while granting them to DHFL.
Speaking about Yes Bank's funding of stressed corporate, finance minister Nirmala Sitharaman said in a briefing earlier today, "The exposure of Yes Bank to some of the very stressed corporates has been since before 2014, like Anil Ambani group, Essel group, DHFL, IL&FS and Vodafone. All this information is in the public domain."
On probing further
The bank has been grappling with mounting bad loans for quite some time, to also end up finally delaying December quarter results which were supposed to be released last month. The bank in question has also been trying to raise $2 billion in fresh capital from February 2019 but failed to do so.
Kapil and Dheeraj Wadhawan of DHFL have been accused by ED for purchasing shares of five firms, including Marvel Township, Faith Realtors, Poseidon Realty, Random Realtors and Abe Realty, before they amalgamated with Sunblink.
These five firms had total outstanding loans of around Rs 2,186 crore till July 2019, which were allegedly appropriated onto the books of Sunblink such as to cover the diversion of loans acquired from DHFL. Also, a probe by the Securities and Exchange Board of India (SEBI) has been initiated to check for insider trading information by senior bank officials.
While Rana Kapoor was found at his residence when the raid was conducted, authorities at airports and ports have been warned as per the official protocol to ensure that a person required for an investigation doesn't leave the country. The Enforcement Directorate will issue a lookout notice against Kapoor soon, which will prevent him from leaving the country.
