Rana Kapoor is an Indian businessman. According to the media, he has received numerous allegations of being involved in the demise of one of India’s largest banks. Find out more below:
CBI charges Rana Kapoor in the Yes Bank Fraud Case.
Banks serve as engines that propel money markets, the financial sector, and economic growth. The Indian banking sector has grown rapidly, especially as we stand on the verge of the fourth industrial revolution. However, this has not been without its challenges. Along with the rapidly expanding banking business, frauds in Indian banks have increased, and there is an urgent need to restructure the banking sector in India, given the recent scams involving crores of rupees.
The current study attempts to assess and analyze the pattern of a particular bank fraud that resulted in impacting the banking sector, as well as its involvement in the ongoing rise of Non-Performing Assets in India.
Furthermore, the study seeks to shed insight into the impact of escalating bank fraud on the profitability of India’s banking sector.
The study states that the number of frauds affecting the Indian banking sector has been steadily increasing in recent years, resulting in an increase in NPAs and a negative impact on the profitability of the Indian banking sector. Stringent action by authorities, combined with the development of innovative methods of fraud detection and reduction, is the only option to protect the reputation of Indian banks and revitalize the country’s banking system.
Introduction
Yes Bank, located in Mumbai, India, was claimed to be formed in 2004 by Rana Kapoor and Ashok Kapoor.
Yes, Bank’s history may be traced back to 1999, when three Indian bankers decided to form a non-banking financial venture. They were Ashok Kapur, who had previously worked as the ABN Amro Bank’s national head, Harkirat Singh, who had previously worked as the Deutsche Bank’s country head, and Rana Kapoor, who had previously worked as the ANZ Grindlays Bank’s head of corporate finance. The remaining 75% of the shares in the non-banking financial industry were held by Rabobank in the Netherlands. Each of the three Indian promoters held 25% of the company.
It was renamed the Yes Bank in 2003. It was also the same year that Harkirat Singh quit owing to worries over Rabobank’s influence in the choice of CEO and executive chairman roles.
Yes Bank has been unable to raise capital in recent years, resulting in a continuous worsening of its financial status. This has resulted in probable loan losses, which has led to downgrades, prompting investors to activate bond covenants and clients to withdraw savings. The bank has accumulated losses and virtually little income during the preceding four quarters. As a result, Rana Kapoor was sacked, and he was detained in connection with an INR 466 crore money laundering case.
What do you know about Money Laundering?
Criminals are largely driven by the potential financial gain from unlawful activity, yet they have difficulty using this money covertly. Their method of making illicit riches appear legal is money laundering. It’s a significant instrument for many illicit operations, including cocaine trafficking and terrorism, assisting criminals in growing and upholding a façade of legitimacy. Unchecked, it can undermine confidence in financial institutions and finance other illegal activities, such as violence and terrorism. Essentially, money laundering gives criminals a way to conceal their illicit profits, which poses a severe threat to both the banking system as well as society at large.
Under Kumar’s new leadership, the bank’s management promptly repositioned itself and dealt with all internal and market-related difficulties in order to regain customer and depositor confidence. Mehta assured shareholders of a speedy recovery under the coordinated efforts of the new board and management, even as the Reserve Bank of India (RBI), State Bank of India (SBI), HDFC Bank, ICICI Bank, Axis Bank, and other banks lent its support through the historic Yes Bank Reconstruction Scheme 2020.
Yes Bank Ltd closed its follow-on public offer (FPO) in July 2020, with 95% participation driven by institutional investors.
Yes Bank is a subsidiary of State Bank of India, which owns 30% of the company as of July 28, 2020.
Yes Bank granted 2,13,650 equity shares to its employees under the business ESOP plan on February 21, 2023.
Chargesheet submitted by CBI against Rana Kapoor and Gautam Thapar in the Yes Bank fraud case
Rana Kapoor’s involvement in the scheme came to light during the investigation, according to officials, despite the fact that he was not identified as a suspect in the FIR filed on June 2 of last year.
In the Yes Bank fraud case, the Central Bureau of Investigation (CBI) has filed a chargesheet against Rana Kapoor and Gautam Thapar.
Thapar is the promoter of the Avantha Group, and Kapoor served as the previous CEO and Managing Director of Yes Bank. According to authorities, the CBI has filed a charge sheet in the case of the Rs 466.51 crore bank fraud against former Yes Bank CEO and Managing Director Rana Kapoor and Avantha Group promoter Gautam Thapar.
In June 2021, an FIR was filed in the Rs 466.51 crore case. Although Kapoor was not mentioned in the FIR, his involvement came to light during further investigations, according to officials.
Thapar was also mentioned in the scam in the charge sheet the investigation agency submitted to the special CBI court in Mumbai.
According to the CBI, Thapar, the directors of Oyster Buildwell Pvt Ltd (OBPL), Raghubir Kumar Sharma, Rajendra Kumar Mangal, and Tapsi Mahajan, as well as unnamed officials of Avantha Realty Pvt Ltd and Jhabua Power Ltd, were the targets of the FIR that was filed after Yes Bank CVO Ashish Vinod Joshi made a complaint.
In addition to this alleged fraud case, Kapoor and Thapar are co-accused in another case involving the alleged misappropriation of public funds in Yes Bank in exchange for a luxury residence in a posh area of the nation’s capital.
They claimed that the central agency has continued to look into the bigger plot and the possible involvement of persons who have not yet been recognized.
They added that Kapoor and Thapar are co-accused in another case involving the alleged misappropriation of public funds in YES Bank in exchange for a luxury residence in a posh area of Delhi.
The accused are accused of engaging in criminal conspiracy, criminal breach of trust, fraud, and forgery in order to divert public funds totaling Rs 466.51 crore, they claimed.
According to the Yes Bank complaint, which is now a part of the FIR, Jhabua Power Limited (JPL), a group subsidiary of OBPL, signed into a 10-year operations and maintenance contract with its holding company Jhabua Power Investment Ltd (JPIL) for its 600 MW power plant.
A long-term loan of Rs 515 crore for 10 years from Yes Bank was approved for OBPL, a member of the Avantha group, in exchange for the payment of an interest-free refundable security deposit of Rs 515 crore to JPIL.
On October 30, 2019, the account became a non-performing asset due to the company’s payment default.
Only 14.16 crore out of the total 514.27 crore the bank disbursed were transferred to JPIL in its IndusInd Bank account, the bank discovered during its forensic audit, and “ultimate end use of Rs 500.11 crore loan fund could not be ascertained,” according to the complaint.
A review of JPIL’s financial records revealed that it had advanced group company Avantha Power and Infrastructure Ltd Rs 345.15 crore in security funds from OBPL, but the auditor was unable to establish a money trail because JPIL’s financial records were missing. During an internal review of bank documents, Yes Bank found that the loans given to OBPL for the security deposit to JPIL were used by it to clear loans of Avantha group of Thapar.
Rana Kapoor, the co-founder of Yes Bank, claims that allegedly laundered money never reached her.
Rana Kapoor, co-promoter of Yes Bank Ltd., was granted bail by a special Mumbai court in a money laundering case, ruling that the claim that the “laundered amount never came to him” was false and that there was no evidence of kickbacks.
Rana Kapoor, co-promoter of Yes Bank Ltd., was granted bail by a special Mumbai court in a money laundering case, ruling that the allegedly “laundered amount never came to him” and that there was no evidence of kickbacks. Even if economic crimes are “different in nature,” the Prevention of Money Laundering Act (PMLA) court stated that an accused in such situations cannot be detained in prison without trial.
In the money laundering case associated with the alleged diversion of a Rs 200 crore bank loan, Special PMLA Court Judge M. G. Deshpande granted Kapoor bail on April 1. A complete judgment was made available on Wednesday. The banker is charged in numerous other instances, including one involving alleged fraud at the private lender he co-founded in 2004, thus he was unable to get out of jail.
Since his arrest by the Enforcement Directorate (ED) in March 2020 in connection with alleged financial irregularities and alleged kickbacks paid to him and his family in exchange for certain questionable loans provided by Yes Bank to a number of high-profile borrowers, Kapoor, 63, has been detained in a Mumbai jail.
He was given bail in a case involving a Rs 200 billion loan from Yes Bank to a business called Mack Star Marketing Pvt. Ltd. Kapoor, who once held the positions of managing director and chief executive officer of the bank, is being investigated for his involvement in the loan’s approval. Mack Star is a joint venture run by Rakesh and Sarang Wadhawan, the founders of Housing Development and Infrastructure Ltd. and Ocean Deity Investments Holdings Ltd., a private company registered in Mauritius. The Wadhawans allegedly acquired six loans totaling Rs 200 crore from Yes Bank through Mack Star, and these funds were then illegally used to pay off other debts and credit facilities, according to the ED.
Kapoor asked for relief under pertinent clauses of the PMLA and the CrPC as well as on the basis of his health in the bail petition, which was submitted by attorneys Vijay and Rahul Agarwal. The ED had objected to the banker’s request for bail, claiming that he was actively participating in the money laundering offense. Additionally, the central investigation agency claimed that the alleged offense against him was “serious” in nature. Bail cannot be granted to him because of “the gravity and magnitude” of the alleged crime. After hearing from both parties, the court stated that a typical loan proposal always undergoes careful examination and scanning in accordance with bank policies and is only approved after fulfilling the necessary conditions.
The judge declared that various bank departments “are in charge and responsible” for approving large loans. In the present instance, “such huge loans of Rs 200.3 crore from Yes Bank would not have been sanctioned,” the court said unless approvals were sought from each and every department and their heads. The investigation agency has not yet disputed the co-accused’s bail, “allowing it to attain finality,” the report stated. The petitioner (Kapoor) is equally placed. The court ruled that neither the allegedly laundered money nor any evidence that he got a kickback for it ever reached him.
Kapoor “is entitled to be released (on bail) as a matter of parity, as the progress of the trial is in the dark,” it was stated, once all other defendants in the case, including the primary defendant Wadhawans, had been freed. The Wadhawans are the main accused and had been found guilty of an offense under the PMLA, according to the ED’s position, the court said. Despite this, they were not detained in the current case. In some cases that the ED and the Central Bureau of Investigation are looking into, the Wadhawans are also being held under court supervision.
The special judge said the ED may shape the discretion provided by the PMLA “as per their wish, but the court has a bounden duty and is under a legal obligation to not allow undue incarceration of any undertrial prisoner”. The court added that it was clear that the applicant (Kapoor) had endured unjustified incarceration for 73% of the three-year minimum sentence stipulated by Section 4 of the PMLA. Economic offenses must be viewed from the standpoint of their intensity and extent because they differ in nature. That does not imply that a prisoner who is awaiting trial should be held without a trial and forced to serve a mandatory minimum sentence without a trial, the special judge noted.
The court stated that the applicant’s unjustified imprisonment for 2 years, 2 months, and 3 days (in the loan fraud case) without a trial was the cost he had to pay for the purported seriousness, scope, and uniqueness of the economic offenses brought against him.
According to the court, Rana Kapoor’s daughter cannot travel to the United States.
Observing that her plea to meet her relatives is not essential or extraordinary grounds to go abroad at a time when she is facing trial in a case where she is accused of being among the beneficiaries of Rs 600 crore kickbacks along with her family, a special CBI court has rejected jailed Yes Bank founder Rana Kapoor’s daughter Roshini Kapoor’s petition to go to the U.S.
“Further investigation is on. The parameters to grant bail and allow a person to go abroad are different. So, releasing her on bail itself is not sufficient to permit her to go abroad. No essential grounds are made out to permit the applicant to travel abroad. The application is to be rejected, “ special judge S U Wadgaonkar said. Roshini was granted bail by the Supreme Court.
Kapoor, along with his wife Bindu and daughters Roshini and Radha Kapoor Khanna, is accused in a corruption and cheating case allegedly involving DHFL. They were arrested in 2021 and the women are out on bail. Kapoor has been in jail since his arrest in March 2020.
The CBI, in its probe, said Kapoor had received Rs 600 crore as kickbacks from Kapil Wadhawan through his daughter’s firm DOIT Urban Ventures. The Rs 600 crore was in lieu of a Rs 3700 crore loan (debenture investment) Yes Bank, then headed by Kapoor, gave to DHFL group. DHFL had defaulted on repayment. The women were directors at DOIT. DHFL promoters Kapil and Dheeraj Wadhawan are also in custody.
Roshini’s advocate submitted that she wished to visit her paternal aunt and cousins in New Jersey to re-establish family ties, especially in view of the fact that she could not attend her cousin’s wedding last year. According to him, re-establishing family ties is essential grounds to go abroad. He also said a lookout circular( LOC) had been issued against her at the CBI’s instance and the court permit her to travel abroad by suspending the LOC. The lawyer further said Roshini would remain present for the trial.
The CBI, however, opposed her plea and submitted that though traveling abroad was a fundamental right, it was restricted. “ The LOC is in existence, It is a matter of common experience that white-collar offenders leave after taking permission to travel abroad and settle down in the foreign country. It is difficult to secure their presence, “ it said.
Roshini is also accused in a related case being probed by the ED and has moved a similar plea before the special PMLA court.
The Delhi High Court granted bail to former Yes Bank CEO Rana Kapoor in a bank fraud case.
Kapoor is accused of stealing public funds between 2017 and 2019, causing the bank to lose Rs 466.51 crore.
According to Bar and Bench, the Delhi High Court granted bail to former Yes Bank Managing Director and Chief Executive Officer Rana Kapoor in a money laundering case on Friday.
The Enforcement Directorate has charged Kapoor and others with stealing public funds of Rs 466.51 crore from Yes Bank between 2017 and 2019.
The former banker was arrested on March 8, 2020, and has since been held in judicial detention. The Enforcement Directorate filed a chargesheet against Kapoor, his wife Bindi Kapoor, and their daughters Radha Kapoor and Roshni Kapoor in May 2021.
The Central Bureau of Investigation also filed a chargesheet against Rana Kapoor and Avantha Group promoter Gautam Thapar in September this year for criminal breach of trust, cheating, criminal conspiracy, and forgery.
Kapoor was not listed as a suspect in the CBI’s first information report filed on June 2, 2021, but his position in the scheme came to light throughout the inquiry, according to the CBI.
Yes Bank, according to the FIR, invested roughly Rs 3,700 crore in Dewan Housing Finance Corporation around the same time it gave a Rs 600 crore credit to a firm called DoIT Urban Ventures Private Limited.
Rana Kapoor’s three daughters own the company. According to the CBI, Kapoor and other accused defendants invested in Dewan Housing Finance Corporation through Yes Bank to reap undue profits for themselves and their families.
The Supreme Court granted bail to Bindi Kapoor and her two daughters in October.
