9 March 2019
Indian government has been forced to rescue Yes Bank the fourth largest lending bank in the country. Reserve Bank of India (RBI), the country’s central bank, announced that the government-owned State Bank of India will take 49% of the shares in the Yes Bank. In 2018, the RBI appointed former Deutsche Bank India chief Ravneet Gill as CEO of Yes Bank in place of its founder Rana Kapoor. Enforcement Directorate (ED) has arrested Rana Kapoor. He has been remanded in custody till March 11. The RBI has limited withdrawal to Rs 50,000 per account.
The Central Bureau of Investigations (CBI) has registered a case against Yes Bank co-founder Rana Kapoor, DHFL and DoIT Urban Ventures for alleged criminal conspiracy, cheating and corruption. It is alleged that DoIT Urban Ventures (India) Pvt Ltd, a firm linked to the Kapoor family, had allegedly received loan funds of $80.7 million as kickbacks. Rana Kapoor’s daughter Radha and Roshni are directors of DoIT Urban Ventures. The amount of $80.7 million to the firm was given when DHFL failed pay to its dues to Yes Bank.
The Enforcement Directorate stopped Rana Kapoor’s daughter Roshni Kapoor from taking a flight to London as she was needed for investigations.
Transactions amounting to $673 million made between some companies owned or were owned by Kapoor and his family members and some companies owned or run by directors and promoters of DHFL are being investigated by the authorities.
Yes Bank exposure to DHFL in the form of short term debentures amounted to $498 Million and loans amounting to $101 million.  DHFL chairman Kapil Wadhawan had been arrested by the ED and brother Dheeraj Deewan has been questioned.   The CBI filed a separate case against DHFL and government officials of UP state power firm. It was alleged that DHFL siphoned off $1.8 billion using 79 shell companies.
Corruption involving banks is not new to India. Several bank frauds have been reported and some of them are:
February 2018 – Punjab National Bank – Nirav Modi. PNP Bank issued guarantees amounting $1.86 billion to Nirav Modi and his uncle Mehul Choksy. They failed to repay the bank loans extended on the strength of the bank guarantee.
2013 – 2019 – The Non-Performing Assets of all the banks went up to $10.9 billion.
September 2018 – Infrastructure Leasing & Financial Services Limited (IL&FS), a shadow banking firm collapsed in 2018 causing largest liquidity freeze in India. IL&FS was owned by government agencies.
March 2018. IDBI Bank. Former Aircel promoter C. Sivasankaran and his companies defaulted on $80 million loan to IDBI bank.
September 2019 – Laxmi Vilas Bank reportedly misappropriated $106 million. The bank is under investigation.
September 2019 – Punjab and Maharashtra Cooperative (PMC) Bank – The bank lent nearly 70% of its capital to real estate firm HDIL which has become a non performing loan. Now the Bank is under Central Bank Supervision.
The RBI enforcement is very weak and that is why there are so many bank failures in India.
India Today reported.