NEW DELHI : Key decisions of Yes Bank Ltd that led to its collapse last week and the role played by its top brass are set to be probed under various laws as the government wants to send a strong signal that mismanagement at institutions with high public interest will not be tolerated.
The government aims to ensure that a bailout of Yes Bank using taxpayers’ funds is justified for the reasons of protecting depositor interest. It will also hold accountable anyone responsible for defaults and for failing to take steps to prevent the bank’s collapse.
The Enforcement Directorate (ED) arrested Yes Bank co-founder Rana Kapoor on Sunday morning in Mumbai and is probing the matter. The Central Bureau of Investigation (CBI) too began a probe later in the day. While officials at the agency did not disclose details of its probe, CBI will now investigate the case against Dewan Housing Finance Corp. Ltd (DHFL), its promoter Kapil Wadhawan and Kapoor for alleged case of cheating and criminal conspiracy. CBI—people familiar with the development said—is probing the links on how Kapoor had allegedly entered into a “criminal conspiracy with Kapil Wadhawan" allegedly in return for Yes Bank not terming loans to DHFL as non-performing assets.
ED’s investigation of Kapoor now covers investments of more than ₹2,000 crore, along with 44 expensive paintings and more than 12 alleged shell firms, reported PTI. The investigating agency recovered documents pertaining to Kapoor family’s assets in London and the financial means used to acquire them, said the PTI report.
An email sent to Yes Bank on Sunday remained unanswered.
Other agency that is likely to enter the picture is the Serious Fraud Investigation Office depending on the nature of violations in the company.
The income-tax department is yet to initiate any investigation, said an official of the department, requesting anonymity.
The key concerns for regulators include serious governance issues, weak compliance, wrong asset classification and risky credit decisions, Union finance minister Nirmala Sitharaman told reporters on Friday.
Whenever businesses fail or a fraud is detected, investigating agencies try to find out if the funds raised from the public and financial institutions were used for their stated purpose. Transactions between the business and any other entity closely held by major shareholders and relatives will also be under scrutiny to see that funds are not diverted to them by way of bogus transactions or by invoice manipulation.
The interest of depositors is being taken care of by the government and the Reserve Bank of India, but the interest of minority shareholders of Yes Bank is not getting adequate attention, said experts.
