Crisis-Hit Yes Bank's Founder Rana Kapoor Arrested For Alleged Fraud

Yes Bank founder Rana Kapoor was taken to the Enforcement Directorate (ED) office for questioning on Saturday

Rana Kapoor has been charged under the Prevention of Money Laundering Act (File)

Highlights

  • RBI capped transactions for Yes Bank users at Rs 50,000 a month
  • Yes Bank said customers can now withdraw money from ATMs
  • Case against Rana Kapoor linked to Dewan Housing Finance Corporation
Mumbai:

Rana Kapoor, the founder of crisis-hit Yes Bank, has been arrested by the Enforcement Directorate after two days of questioning in an alleged bank scam worth Rs 4,300 crore. He will be in their custody till March 11. The Reserve Bank of India (RBI) has capped transactions for every Yes Bank user at Rs 50,000 for a month, till April 3, after the private bank couldn't service its debts following defaults by big firms to whom it had loaned large sums.

Mr Kapoor was taken to the Enforcement Directorate (ED) office in Mumbai for questioning on Saturday. Earlier, the probe agency conducted raids at his house at Samudra Mahal residential tower in Mumbai and filed a case under the Prevention of Money Laundering Act (PMLA) against him.

In a late-night tweet on Saturday, Yes Bank said its customers can now withdraw money from ATMs. "You can now make withdrawals using your YES BANK Debit Card both at YES BANK and other bank ATMs. Thanks for your patience," the private lender tweeted.

Yes Bank customers have been facing a tough time in accessing internet banking, using payment via UPI and withdrawing from ATMs after the RBI's sudden announcement to curb withdrawals led to a scramble to take out money.

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Worried customers of Yes Bank stand in a queue to withdraw money after the RBI capped withdrawals at Rs 50,000

Current account holders have complained of severe problems to service their debts and pay salaries, especially when the spring festival of Holi is just two days away.

The case against Mr Kapoor is linked to the scam-hit Dewan Housing Finance Corporation (DHFL) as the loans given by the bank to the company allegedly turned sour, investigators have said.

Yes Bank used public money to buy DHFL debentures worth Rs 3,700 crore, the probe agency told a court in Mumbai today. They alleged DHFL gave Rs 600 crore to DoIT Ventures as "kickbacks". They said the collateral was only Rs 40 crore for the transaction.

"Kapil Wadhwan and Rana Kapoor entered into criminal conspiracy to defraud public money," the probe agency said.

Mr Kapoor, however, declined to sign his arrest memo. He submitted before the court that he doesn't hold any share of DoIT and his daughters are directors there, and the loan is still considered performing asset of DHFL.

Newsbeep

The alleged kickbacks were received in the accounts of Mr Kapoor's his wife Bindu, news agency Press Trust of India reported. She was brought to the ED's office this morning.

Other alleged irregularities are also under the agency's scanner, including one related to an alleged Employees Provident Fund fraud (EPF) in the Uttar Pradesh Power Corporation Ltd.

The CBI recently took over investigation into the Rs 2,267-crore EPF fraud in Uttar Pradesh, where hard-earned savings of power sector employees were invested in DHFL.

Banking behemoth State Bank of India (SBI) has said it has time till tomorrow to take a call on taking 49 per cent stake in Yes Bank.

With inputs from PTI