CBI Reveals Yes Bank's Rs 2,700 Crore Loss from Fraudulent Transactions with Anil Ambani's Companies

Mumbai:

Yes Bank incurred a loss exceeding Rs 2,700 crore due to co-founder Rana Kapoor's "unilateral decision" to invest in Anil Ambani-led financial companies, according to the CBI's charge sheet regarding alleged fraudulent transactions between the bank and the industrialist's group entities.

The Central Bureau of Investigation filed a charge sheet last month against 13 individuals and entities, including Anil Ambani, Rana Kapoor, and his family members, alleging criminal conspiracy, cheating, and corruption related to loans and investments.

The federal probe agency's document indicated that further investigation was ongoing regarding the role of Anil Ambani's son Anmol Ambani, who served as executive director of Reliance Capital, in the case.

The case originates from two separate complaints filed by the Chief Vigilance Officer of Yes Bank.

According to the charge sheet, Yes Bank—under Rana Kapoor's leadership as managing director and CEO—invested Rs 5,010 crore in financial companies of the Anil Dhirubhai Ambani (ADA) Group between 2017 and 2019.

These investments comprised Rs 2,965 crore in non-convertible debentures (NCDs) of Reliance Home Finance Limited (RHFL) and Rs 2,045 crore in commercial papers of Reliance Commercial Finance Limited (RCFL). By December 2019, Rs 3,337.5 crore of the total amount had become Non Performing Investment (NPI), the charge sheet stated.

The bank failed to recover the entire NPI from securities backing these investments, resulting in a loss of Rs 2,796.77 crore.

The charge sheet mentioned that certain entities within the ADA Group functioned as shell companies.

"These shell companies primarily served to receive funds from RHFL and RCFL, and subsequently channel those funds to other ADA Group companies to fulfill their existing financial obligations," it stated.

The probe agency alleged that these transactions resulted from a "quid-pro-quo" arrangement for loans granted by RHFL and RCFL to companies owned by Rana Kapoor's family members.

Rana Kapoor, acting in his capacity as a public servant, allegedly conspired criminally with his wife Bindu Kapoor and daughters Radha and Roshini Kapoor, along with Ambani, then chairman of ADA Group.

In furtherance of this criminal conspiracy, Rana Kapoor "unilaterally decided to subscribe to NCDs, fully aware that there was no demand for these NCDs in the secondary market and that holding them long-term would harm Yes Bank," the charge sheet stated.

Companies led by Bindu Kapoor obtained credit facilities amounting to Rs 570 crore from RHFL and RCFL at reduced interest rates under Anil Ambani's instructions, the CBI alleged.

The charge sheet emphasized that protocol required Rana Kapoor to disclose loan facilities availed by companies owned by his family.

However, he "intentionally and dishonestly failed to disclose" this information, it added.

Additionally, the CBI reported that Reliance Nippon Mutual Fund subscribed to NCDs worth Rs 1,160 crore issued by Morgan Credits Private Limited (owned by Kapoor's daughters) at lower interest rates.

It also invested Rs 2,250 crore in Yes Bank AT-1 Bonds (hybrid capital instruments that banks issue to meet regulatory requirements) through private placement and secondary market under Anil Ambani's influence, the CBI alleged.

The charge sheet asserted that SEBI's mutual fund regulations prohibited Anil Ambani from directly investing Reliance Nippon Mutual Fund's funds in his other financial companies. He allegedly circumvented this by indirectly subscribing to NCDs and investing in Yes Bank's AT-1 bonds.

The Rana Kapoor-led bank subscribed to NCDs of RHFL and RCFL, thereby routing money back to Ambani's company, according to the document.

The CBI stated it was investigating Anil Ambani's son's role in subscribing to Morgan Credits' NCDs and Reliance Nippon Mutual Fund's investment in AT-1 bonds.