Kapoor’s arrest puts kickbacks in focus
The primary allegation against Rana Kapoor is related to Doit Urban Ventures, a company belonging to his family, receiving ₹600 crore from DHFL in return for the private lender not labelling loans to DHFL as NPAs
MUMBAI: The arrest of Yes Bank Ltd co-founder Rana Kapoor by the Enforcement Directorate (ED) on Sunday lends credence to allegations of kickbacks and round-tripping of funds by Kapoor.
The primary allegation against Kapoor is related to Doit Urban Ventures, a company belonging to his family. The company received ₹600 crore from Dewan Housing Finance Corp. Ltd (DHFL) allegedly in return for Yes Bank not labelling loans to DHFL as non-performing assets (NPAs). The directors of Doit Urban Ventures are Rana Kapoor’s daughters Radha Kapoor Khanna and Roshini Kapoor. In mounting trouble for the family, the Central Bureau of Investigation (CBI) has also initiated a probe into the matter.
While CBI officials declined to give details of the nature of the probe, a person familiar with the development said the agency is investigating if Kapoor had entered into a criminal conspiracy with Kapil Wadhwan, a former chairman and managing director of DHFL, for extending financial assistance to the home financier through Yes Bank.
In the wake of Kapoor’s arrest, a lookout circular had been issued by the ED against his wife and daughters as well.
As on March 31, 2019, Morgan Credits Pvt. Ltd, another Rana Kapoor family company, held 100% stake in Doit Urban Ventures. According to filings in the registrar of corporates (RoC), Doit posted a loss of ₹48.76 crore on revenue of ₹59.36 crore. In the previous financial year (FY18), the company did not have any revenue from operations but had other income of ₹43.55 crore and a net profit of ₹3.44 crore. Interestingly, in FY19, the company’s finance costs of ₹63.68 crore was higher than its total revenue.
Doit Urban Ventures has 10 subsidiaries, including DoIT Smart Hospitality (India) Pvt. Ltd, DoIT Smart Sports Infrastructure (India) Pvt. Ltd and DoIT Real Assets (India) Pvt. Ltd.
Meanwhile, the directors of Morgan Credits Pvt Ltd—holding company of Doit Urban Ventures—are Rana Kapoor’s daughters Rakhee Kapoor Tandon, Radha Kapoor Khanna and Roshini Kapoor. Morgan Credits, which owned a 3.03% promoter stake in Yes Bank at the end of FY19 sold its entire stake last year. A report by Care Ratings on December 2 said that until September 30, Morgan Credits was a promoter entity of Yes Bank and received dividend income of ₹14.5 crore in the first six months of FY20.
Going by what the FM said on Friday, the undoing of Yes Bank could be attributed to loan exposures to some stressed corporates, including Reliance Anil Dhirubhai Ambani Group, Essel Group, IL&FS and DHFL. A person close to Kapoor said that he truly was the lender of last resort for many stressed borrowers and entered deals where others did not venture.
An Anil Ambani group company, Reliance Infrastructure— which in January and February defaulted in repaying loans to J&K Bank, Srei Equipment Finance Ltd and Yes Bank— made an interesting disclosure on March 3. Of the firm’s total borrowings from banks and other financial institutions of ₹3,871 crore (as on January 31), ₹3,627.19 crore or 94% was from Yes Bank. Among the three financiers, Yes Bank’s repayment tenure was the longest at 5-10 years, compared to 5.25 years of J&K Bank and three years for Srei Equipment Finance.
In a response to website Print, Kapoor said: “I was the founder of the bank. But I have had nothing to do with it for the last 14 months. You should talk to (chairman) Brahm Dutt and (CEO) Ravneet Gill. They are the ones responsible for whatever has happened at the bank in the last one year.”
Meanwhile, RBI on Sunday assured all bank depositors that their money is safe.