Court orders police custody for former Yes Bank MD & CEO Rana Kapoor till March 11

A Mumbai holiday court on March 8 ordered an Enforcement Directorate (ED) custody for former Yes Bank MD and CEO Rana Kapoor till March 11.

ED had sought custody till March 13, but was allowed by the court only until March 11.

The former YES Bank promoter was produced before the court after being arrested at around 4.00 am on March 8. He was arrested after being questioned by ED officials for more than 20 hours.

Also read: Teary-eyed Rana Kapoor tells court no fraud at Yes Bank, not running anywhere

Kapoor was reportedly not ready to sign on the arrest memo in the morning.

He broke down in the court when he was asked, as per procedure, if there was any ill-treatment by the Directorate.

An ED counsel informed the court that a scheduled offence has been registered against Kapoor. The agency has registered a new case against Kapoor and Dewan Housing Finance Limited (DHFL)’s former promoter Dheeraj Wadhawan.

The ED counsel argued that Yes Bank had purchased debentures worth Rs 3,700 crore from DHFL and that the company had granted loans of Rs 600 crore against properties worth Rs 40 crore to cover the transaction.

The agency said that proceeds from the crime stand at Rs 4,300 crore of public money and that loans from DHFL were given to Doit Urban Ventures where Kapoor is a founder and his daughters are 100 percent shareholders. The agency’s counsel further stated that there was no proper business of the company.

The probe agency claimed that the value of properties mortgaged with DHFL was inflated to Rs 750 crore, against the granted loan of Rs 600 crore and that there was a criminal conspiracy between DHFL and Kapoor to receive these loans.

Also read: How Rana Kapoor's 'authoritarian' streak proved to be the bank's undoing

Money laundered by Kapoor was used for personal purpose, ED said, adding that he was not co-operating with the investigation.

Kapoor's counsel argued that custody should not be granted on medical grounds.

The counsel claimed that no forensic audit was done into Yes Bank’s books. The counsel further claimed that ED was selectively targeting Kapoor as there is public outrage and because he is close to DHFL promoters, socially. The counsel added that DHFL had given Rs 90,000 crore in loan to 35 entities.

The central agency conducted searches at Kapoor's Mumbai residence Samudra Mahal late on the evening of March 6. He was then brought for questioning at the ED's zonal office on March 7 in Mumbai.

Kapoor is being investigated in the alleged irregularities in the investment of over Rs 4,300 crore Employees’ Provident Fund (EPF) of Uttar Pradesh Power Corporation (UPPCL), the state-owned power firm, in the scam-tainted DHFL. The investments date back to a period between March 2017 and December 2018.

Also read: RBI likely to offer Rs 8,000-10,000 crore special liquidity window for Yes Bank

ED had registered a separate case against UP Power officials and DHFL under the Prevention of Money Laundering Act (PMLA).

On March 6, the CBI had filed a separate case against DHFL and government officials of the UP state power firm.

On March 5, the Reserve Bank of India (RBI) said it is superseding the board of troubled private sector lender Yes Bank with immediate effect. Former State Bank of India (SBI) CFO Prashant Kumar has been appointed as the bank administrator.

"This has been done to quickly restore depositors' confidence in the bank, including by putting in place a scheme for reconstruction or amalgamation," the RBI had said in a statement.

The central bank has also imposed a moratorium on the private lender till April 3, 2020. Withdrawals from the bank have been capped at Rs 50,000 per depositor.