Home / News / India /  Rana Kapoor, Yes Bank founder, arrested, accused of money laundering

The Enforcement Directorate (ED) on Sunday arrested Yes Bank’s former Chairman and founder Rana Kapoor on charges of money laundering. The arrest, under the Prevention of Money Laundering Act, comes after 30 hours of intense questioning. Kapoor is accused of receiving kickbacks from various corporate entities on disbursal of loans.

In one case, the ED has alleged that Kapoor received 600 crore from Dewan Housing Finance Limited (DHFL) in one of the family ventures in exchange of the bankrupt company not repaying its loans. Rana ran Yes Bank as his fiefdom before being finally forced to step down by the Reserve Bank of India (RBI) last year. At one point, Yes Bank was the fifth largest lender of the country.

The bank had been looking for fund infusion for more than a year. Realising that problems at Yes Bank could lead to a systemic crisis, the RBI two days back dissolved the bank management, asked State Bank of India (SBI) to take a 49% stake in the private lender and as per reports, is also considering a special Rs10,000-crore special window for the private bank.

The central bank has put in place till 3 April a limit of 50,000 on withdrawals for bank’s customers across all their accounts combined.

Under the RBI-authored Yes Bank Ltd Reconstruction Scheme, 2020’, all instruments qualifying as Additional Tier 1 capital (AT1), issued by Yes Bank, have been written down permanently. The authorised share capital shall has been altered to Rs50 billion.

Under conditions placed on the new investor, SBI, it is not allowed to cut its stake to below 26% before completion of 3 years. The state-owned bank is also not allowed to terminate any Yes Bank staff for at least a year, unless they are its key management personnel.

SBI Chairman Rajnish Kumar has said that it will deal with Yes Bank at an arm’s length basis and there was no plan to merge the two. He told mediapersons on Saturday that SBI was talking to other investors as well to bring in their equity in Yes. He put the number of such investors at 23 and said those keen to invest at least 5% in Yes, will come under RBI’s ‘fit and proper’ criteria.

Since the Yes crisis unfolded, most mutual funds holding Yes’s debt paper have written down the value of their investment to zero. Most equity shareholders too have been left holding junk. On Friday, Yes share fell 85% to 5.65 on the NSE before clawing back to 16.15.

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