The CBI conducted raids at seven locations in connection with the FIR at the RKW developers and DoIT Urban Ventures Pvt Ltd, premises linked to Rana Kapoor, and DHFL Bandra office in Mumbai. The Economic Offence Wing (1) of CBI has lodged the FIR in New Delhi. It has also named Kapil Wadhawan, promoter of Dewan Housing Finance Corp. Ltd (DHFL) and his brother Dheeraj as co-accused in the case.

Founder and former managing director of Yes Bank Ltd, Rana Kapoor
Founder and former managing director of Yes Bank Ltd, Rana KapoorWikimedia Commons

Raids conducted and Rana Kapoor arrested

The promoter of DHFL Kapil Wadhawan, DoIT Urban Ventures, a company linked to Rana Kapoor and family have been booked in cases pertaining sections 120 (B) (Criminal Conspiracy), section 7, 12 & 13 of the Prevention of Corruption Act and 420 (Cheating) of Indian Penal Code. Taking cognizance of the FIR registered by CBI, ED has lodged a money laundering case against Rana Kapoor under the PMLA act. Rana was arrested around 3 am on Sunday and will be sent to ED custody until March 11 by Mumbai's Special Court.

According to sources, the CBI is also in touch with the Reserve Bank of India (RBI), Finance Ministry, and other government bodies in connection with the case. The case is registered on grounds of loans given by Yes Bank's Rana Kapoor to scam-hit Dewan Housing Finance Corporation (DHFL) which allegedly turned them into non-performing assets (NPAs).

Also, a loan of Rs 600 crore extended by DHFL to an entity allegedly linked to Rana Kapoor's family member is at the centre of the probe. Investigations are on, on the disbursal of loans to some corporate entities by Yes Bank founder and kickbacks allegedly received by the firms associated with Kapoor's wife and daughters.

The list of accused in this case for alleged involvement in the scam are: Dewan Housing Finance Corporation Limited (DHFL), DOIT Urban Ventures India Pvt. Ltd., M/s RAB Enterprises, M/s Morgan Credits Pvt Ltd., RKW Developers, Rana Kapoor, Kapil Wadhwan, Bindu Rana Kapoor, Director of M/s RAB Enterprises, Roshini Kapoor, Director of Morgan Credits Pvt Ltd and DOIT Urban Ventures, Raakhe Kapoor Tandon, Director of Morgan Credits Pvt Ltd., Radha Kapoor Khanna, and Dheeraj Rajesh Kumar Wadhwan, among others.

Culling into details

According to the FIR, "During 2018-19, Rana Kapoor, then promoter Director and CEO of Yes Bank entered into a criminal conspiracy with Kapil Wadhawan, promoter Director of M/s DHFL and others for extending financial assistance to DHFL in lieu of substantial undue benefits to himself and his family members through the companies held by them."

As a part of the criminal conspiracy, from April to June 2018, Yes Bank Ltd. invested Rs 3,700 crore in short term debentures of M/s DHFL. Simultaneously Kapil Wadhwan extended Rs 600 crores to Rana Kapoor and his family members under the garb of builder loans given by M/s DHFL to M/s DOIT Urban Ventures Pvt Ltd., a wholly-owned subsidiary of M/s RAB Enterprises in which Bindu Kapoor, wife of Rana Kapoor is the Director.

It was further learnt during the investigation that DHFL has not redeemed the amount of Rs 3,700 crores invested by YES Bank in its debentures till date. Further, Yes Bank sanctioned a loan of Rs 750 crores to RKW Developers, a DHFL group company for their Bandra reclamation Project,  Mumbai. But the whole amount of money was siphoned off by Kapil Wadhawan since it was transferred by RKW Developers Pvt Ltd. to DHFL without making an investment in the Bandra reclamation project for which the loan amount was primarily sanctioned.

The Rs.600 crore loan was sanctioned to M/s DOIT Urban Ventures on the basis of mortgaging a substandard property with meagre value and considering its future conversion from agricultural land to a residential one.

Also, Rana Kapoor obtained undue pecuniary advantage from DHFL in the matters of investment in the debentures of M/s DHFL by Yes Bank, through the companies held by his wife and daughters.  Rana Kapoor has misused his official position in several other transactions and obtained illegal kickbacks directly or indirectly through entities controlled by him or his family members.

Kapoor, his family and the Wadhawan's have been charged with criminal conspiracy, bribery, cheating, and criminal misconduct under the Indian Penal Code (IPC), Prevention of Money Laundering Act and the Prevention of Corruption Act.

Over 40,000 customers stranded abroad without money

The Yes Bank crisis has hardest hit the customers travelling overseas using Yes Bank international debit cards and forex prepaid cards instead of currency notes. Those who have bought Yes Bank forex prepaid cards against cash currencies suddenly realise that their forex pre-paid instrument is not being honoured, leaving them helpless, possibly stuck in a situation where they cannot pay their hotel bills and have no money to eat.

Forex cards

The forex cards make possible payment for accommodation, food, clothing and other necessities abroad for Indian travellers. Imagine you are travelling outside the country and hugely reliant on banking with your credit/debit cards for funds, and now the government issues a sudden moratorium and you cannot transact abroad.

This is creating a situation of panic and frenzy among Yes Bank customers, who are worried about their money if safe. The customers are tweeting and sending SOS messages to their friends and family seeking help during the unprecedented crisis.

The scenario is further worse for customers who've bought foreign exchange, pay as you go cards to transact for purchases in lieu of money forex. These customers now are not in a position to pay for their journey, lodge payments, meals and other expenses.

To ease the withdrawal inconvenience caused to customers in India, Yes bank said "Customers can withdraw cash from Yes Bank and different banks' ATMs utilizing Yes Bank's debit card."

The bank has issued a set of FAQs and clarified that all online remittances including payments through RTGS/NEFT and clearing activities will be suspended until further notice from RBI. With respect to the reinstatement of clearing activities, EMIs will be honoured up to the prescribed limit. All cheques already issued will not be honoured until the clearing resumes.

Steps forward

The Reserve Bank of India (RBI) passed a moratorium and imposed several restrictions, to include capping withdrawals up to Rs 50,000 until April 3 this year, on account of the bank's financial health witnessing a steady decline and its inability to raise capital.

Reserve Bank of IndiaReuters

Former Chief Financial Officer of State Bank of India, Prashant Kumar will be administering working of the Yes Bank until the restructuring plan is implemented and complete within the next 30 days. Prashant Kumar, administrator of Yes Bank recently said, "The moratorium on Yes Bank will be lifted by Saturday with liquidity support from the RBI and the SBI, much before the RBI deadline comes into place and normalcy in operations will be restored."

Anticipating flight of deposits in the coming days with SBI as the equity partner, Prashant Kumar awaits more clarity on the capital side from RBI. There are no plans for the merger at this point of time, however, with the moratorium soon getting lifted by RBI, a notification for reconstitution of the board will be issued.