YES Bank’s Kapoor approved bad loans worth ₹20k cr: ED
THE DEFENCE LAWYER ARGUED THAT WHEN RANA KAPOOR LEFT THE BANK, BAD LOANS MADE UP ONLY 1% OF THE TOTAL LOAN BOOK
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. “I can’t be held responsible for the failure of the present management,” Manashinde argued on Kapoor’s behalf.
Manashinde denied the allegations that Kapoor received kickbacks for giving loans. He added that no bribe had been taken. Kapoor was the highest paid banker and received almost ₹50 crore a year from the bank since 2004 until recently, Manashinde argued, adding he had received awards from various institutions as the best banker.
The agency claimed that YES Bank bought debentures worth ₹3,700 crore of DHFL in Apriljune 2018. In lieu for the securities, DHFL sanctioned a ₹600crore loan to Doit Urban Ventures Pvt Ltd, a company in which Kapoor’s daughters are directors. The loan was given without adequate collateral.
The defence said that all the three daughters had put up collateral and they were capable of returning the loan amount of ₹600 crore, which had been in the form of kickbacks. He also said there were documents to show how the said money had been utilised.
On March 8, the Reserve Bank of India (RBI) put YES Bank under a moratorium and capped withdrawals at ₹50,000 per account till further orders.
DHFL’S promoter Kapil Wadhawan was arrested by the ED in connection with a money-laundering probe against late gangster Iqbal Mirchi and is currently out on bail.
The government has assured depositors in the lender that their money was absolutely safe and enlisted State Bank of India to bail out YES Bank.