Yes Bank's Former CEO and Several Others Face Charges in a Breach of Trust Investigation
Yes Bank Ex-CEO Rana Kapoor and Others Face FIR Over Alleged Illegal Transfer of Mortgaged Property
The Mumbai Police have registered a First Information Report (FIR) against former Yes Bank MD and CEO Rana Kapoor and others for alleged illegal transfer of mortgaged property worth Rs 1,000 crore. According to an official, the FIR was registered at Worli police station against Kapoor, Sudhir Walia, and other bank officials on a complaint filed by Lakhminder Dayal Singh, associated with Saffair Land Development, a sister concern of HDIL.
The FIR alleges that Yes Bank transferred a loan of Rs 150 crore to an asset reconstruction company, Suraksha Asset Reconstruction Pvt Ltd, without classifying it as a Non-Performing Asset. This loan was sanctioned in 2016 to Saffair Land Development, which had mortgaged properties valued at Rs 1,000 crore with the bank to secure the loan. The repayment period for the loan was 36 months, but in June 2018, Singh discovered that Yes Bank had authorized Suraksha ARC to recover Rs 176.53 crore from his company.
A special audit report in 2019 noted that the mortgaged property valued at Rs 1,000 crore was illegally transferred to Suraksha ARC, even though the company had not been declared a Non-Performing Asset. The properties were sold off at below-the-market rate, Singh alleged. Additionally, the complainant claimed that Yes Bank provided margin money of Rs 22.5 crore to Suraksha ARC by routing it through multiple accounts as part of a conspiracy to grab the mortgaged properties.
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Based on the complaint, Worli police registered a case against Kapoor, Walia, and others under relevant sections of the Indian Penal Code, including section 409 (criminal breach of trust) and section 120B (criminal conspiracy). No arrests have been made so far, and further investigation is underway, according to a police official.
Comparison of Loan Amounts
| Loan Amount | Purpose | Sanctioned Year |
|---|---|---|
| Rs 300 crore | Privilege Power and Infrastructure | 2015 |
| Rs 150 crore | Saffair Land Development | 2016 |
Note: The loan amounts are based on the information provided in the FIR and are subject to verification during the investigation.
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Investor Takeaway
Investors should be cautious of potential regulatory risks and their impact on bank stocks.
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