YES Bank’s Kapoor approved bad loans worth ₹20k cr: ED

MUMBAI: YES Bank, under co-founder Rana Kapoor, sanctioned loans worth ₹30,000 crore, of which ₹20,000 crore have turned into non-performing assets (NPA) and need to be investigated, the Enforcement Directorate (ED) told a special Prevention of Money Laundering Act (PMLA) court on Wednesday, seeking his custody. The court granted Kapoor’s custody to the ED, which probes money laundering offences, until March 16.

ED counsel Sunil Gonsalves told the court that Kapoor and his family were linked to 78 companies, which are under the agency’s scanner. He said the agency was checking if the ₹20,000 crore was diverted to the 78 companies linked to Kapoor and his family and if there had been a quid pro quo in the sanctioning of the loans.

The special judge for PMLA, PP Rajvaidhya , sought documents from the agency to support their claim, to which the agency produced records of a forensic audit of the bank.

Kapoor’s lawyer Satish Manashinde objected to the plea, saying when Kapoor left the bank (in early 2019), NPAS, or bad loans, made up only 1% of the total loan book. He alleged that Kapoor, who was arrested on Sunday, had been made a scapegoat.

The defence raised questions on searches conducted by the ED at Kapoor’s house much before the case was registered on March 7. Manashinde argued that when the ED conducted the searches on March 6, the Central Bureau of Investigation had not registered a case. “Predicate offence was registered much later by the CBI and before that ED began probe and case of ED was registered,” the lawyer contended.

As per the law, the ED can begin a probe only after a predicate offence, a crime that is a component of a more serious crime, is registered by the other agency for alleged financial fraud.

The ED countered the argument and claimed the searches were related to a case of money laundering against Dewan Housing Finance Corporation Limited (DHFL). The agency said it found material related to money laundering by Kapoor during the searches and so a separate case was registered later.

Manashinde contended that when Kapoor left the bank, its condition was much better, but the management team which subsequently took over failed.