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YES Bank loan case: Cox & Kings, group firms tagged as 'wilful defaulters' for Rs 1,862 cr loans

On October 6, ED arrested Anil Khandelwal, CFO of Cox and Kings Group, and Naresh Jain, internal auditor, under Prevention of Money Laundering Act in YES Bank loan fraud case

The ED probe has found that CKG forged consolidated financial statements to get loans

YES Bank Ltd has classified Cox & Kings, its other two group companies Cox & Kings Financial Services, and Ezeego One Travel and Tours as "wilful defaulters" for a loan worth Rs 1,862 crore. The exposure to these three companies comprises Rs 519.44 crore loan to Cox & Kings, Rs 944.24 crore to Ezeego (another group entity of CKG) and Rs 398.37 crore to Cox & Kings Financial Services.

A company or a borrower is considered as "wilful defaulter" if it fails to meet the payment obligations even though it has all the resources to pay the amount. The information regarding Yes Bank's defaulters was updated in credit information bureau TransUnion Cibil, LiveMint reported. Cox & Kings, once one of the leading tourism companies in India, has been caught in the midst of money laundering allegations.

On October 6, the Enforcement Directorate (ED) had arrested Anil Khandelwal, Chief Finance Officer of Cox and Kings Group (CKG), and Naresh Jain, internal auditor of the company, under the Prevention of Money Laundering Act, 2002 (PMLA) in the YES Bank loan fraud case.

Both the accused were produced before the Special Judge (PMLA) and they were sent to 7-day ED custody. The ED investigation found that CKG forged consolidated financial statements by manipulating the balance sheets of overseas subsidiaries, and also some board resolutions submitted to banks for sanctioning loans. Loans sanctioned to group companies were diverted through non-existent companies, subsidiaries and related entities.

Investigations revealed all loans sanctioned by YES Bank to CKG group were under the instruction of the lender's former CMD Rana Kapoor, who allowed the loan sanctions by bypassing the norms. While loans to CKG group continued to be sanctioned, no efforts were taken to recover the same.

Total loan given to the group by YES Bank stands at Rs 3,642 crore. Investigation further revealed that the Cox & Kings Group showed sales of Rs 3,908 crore to 15 non-existent or fictitious customers from 2014-2015 to 2018-2019. Majority of collection shown in ledgers from Ezeego (another group entity of CKG) was not found in the bank statements. Also, there are 15 high-value 'fictious' debtors in the books of accounts. Another 147 customers also appeared to be suspicious and non-existent.