Authorities arrested India's Yes Bank Ltd founder on accusations of money laundering on Sunday, in the midst of actions to bail the country's fourth-biggest privately-held lending facility.
In a late-night operation on Friday, India's central bank seized control and implemented withdrawal limits at 50,000 rupees ($695) a month per depositor of Yes Bank, which has been hounded by mounting volumes of delinquent loans. The bank has more than 1,000 branches and over 1,800 ATMs across India.
Based on statements by India's Enforcement Directorate, the country's financial crime probe body, Rana Kapoor has been arrested as "he was not cooperating in the investigation," a bank representative told AFP.
Kapoor was apprehended at around 3 a.m. Sunday after he was questioned for over 20 hours by authorities from the Enforcement Directorate in Mumbai. Officials earlier raided Kapoor's waterfront home in a posh Mumbai neighborhood. Yes, Bank confirmed Kapoor's arrest.
The arrest of Kapoor lends credence to accusations of kickbacks and round-tripping of finances by Kapoor. The primary allegation against him is linked to Doit Urban Ventures, a company that his family owns.
The company received ₹600 crores from Dewan Housing Finance Corp. Ltd allegedly in exchange for Yes Bank not labeling loans to DHFL as "non-performing assets." The directors of Doit Urban Ventures are Rana's daughters Radha Khanna and Roshni Kapoor. To add to the family's trouble, the Central Bureau of Investigation has also launched an investigation into the matter.
The State Bank of India on Saturday disclosed it was prepared to invest 24.5 billion rupees for a 49 percent share in Yes Bank Ltd as part of a central bank-supported rescue measure. According to SBI Chairman Rajnish Kumar, 23 prospective capitalists have signified their intention to invest and "they include some very good names."
The Reserve Bank said Yes Bank's weakened condition was mainly the result of its incapacity to raise capital to address potential loan losses and downgrades. Indian Finance Minister Nirmala Sitharaman announced on Friday that a restructuring plan for Yes Bank Ltd would be finalized within 30 days.
The country has been grappling with a liquidity problem caused by the near-shutdown more than a year ago of IL&FS, one of India's largest shadow banks. Yes Bank's exposure to shadow lending entities was more than 11 percent as of September, Bloomberg News reported.
In the wake of Kapoor's arrest, a lookout order had been released by the Enforcement Directorate against his daughters and wife. A lookout circular is usually issued by an investigating committee when a case is filed against a person. The directive is then forwarded to airports for strict monitoring.
