Yes Bank Crisis : Round tripping of funds leads to crackdown; What next now?

Yes Bank Crisis : In a surprise to the business community, the shares of Yes Bank on Monday zoomed over 30 per cent after State Bank of India confirmed that it would pick up 49 per cent stake in the cash-strapped lender for Rs 2,450 crore. While, the scrip witnessed a sharp rise, spiking 29.63 per cent to Rs 21 on the BSE, the NSE jumped 32.20 per cent to Rs 21.35.

 

SBI on Saturday had announced that it would pick up a 49 per cent stake in Yes Bank for Rs 2,450 crore and clarified that all the deposits and liabilities of the reconstructed bank would continue in the same manner. The cash-strapped Yes Bank on Friday was placed under a moratorium, with the RBI capping deposit withdrawals at Rs 50,000 per account for a month and superseding its board. With this, the Yes Bank now will not be able to grant or renew any loan or advance, make any investment, incur any liability or agree to disburse any payment.

 

 

The reasons for the Yes Bank crisis are supposed to slide around excessive loans, forcing the depositors to worry for the life long savings. However, FinMin Nirmala Sitharaman on Saturday asked the depositors to not to worry for their money as the deposit capital was totally safe. Both the RBI and the Centre are looking at this and I've personally monitored the situation for a couple of months along with RBI have taken the course that will be in everybody's interest. e RBI is fully ceased of the matter. Their moneies are safe. I'm constantly in contact with the RBI. We are fully of ceased of the development", she had said.

 

Meanwhile, the Enforcement Director on Sunday arrested the Yes Bank Ltd co-founder Rana Kapoor for round tripping the bank funds. The primary allegation against Kapoor is related to Doit Urban Ventures, a company belonging to his family. The company received ₹600 crore from Dewan Housing Finance Corp. Ltd (DHFL) allegedly in return for Yes Bank not labelling loans to DHFL as non-performing assets (NPAs).

 

The directors of Doit Urban Ventures are Rana Kapoor’s daughters Radha Kapoor Khanna and Roshni Kapoor. In mounting trouble for the family, the Central Bureau of Investigation (CBI) has also initiated a probe into the matter. A Mumbai court sent Kapoor to ED custody till Wednesday. The ED has estimated the size of the crime at ₹4,300 crore, a figure which was rejected by Kapoor’s lawyers.

 

The regulatory actions, undertaken by the RBI and the government, came hours after finance ministry sources confirmed that SBI was directed to bail out the troubled lender. For the next month, Yes Bank will led by the RBI-appointed administrator Prashant Kumar, an ex-chief financial officer of SBI.