Yes Bank-ARC bank fraud case: Enforcement Directorate searches 17 premises in Mumbai, Khandala, and Delhi

Mumbai: The Enforcement Directorate (ED) on Tuesday conducted searches at 17 locations across Mumbai, Khandala, and Delhi linked to Suraksha Asset Reconstruction Company Ltd (SARCL) promoter Sudhir Valia and other senior executives in connection with an alleged bank fraud case involving the company and Yes Bank’s former co-promoter Rana Kapoor.The ED is probing a money laundering case involving the alleged collusion between Asset Reconstruction Companies (ARCs) with Yes Bank by engaging in circular transactions to fraudulently take over stressed assets, undervaluation of auctioned properties, inflated and fraudulent claims.The ED’s money laundering case is based on a Mumbai Police FIR on a complaint of a director of Sapphire Land Development Ltd, a sister concern of HDIL, against Kapoor, Walia and others.

According to the police case, Yes Bank, then headed by Kapoor, allegedly transferred properties worth nearly Rs 1,000 crore to SARCL to recover an outstanding loan of about Rs 150 crore, without first classifying the loan account as a Non-Performing Asset (NPA).The complaint alleged Sapphire Land Development Ltd sought a loan of Rs 150 crore from Yes Bank, which was sanctioned in 2016. Properties belonging to HDIL and its group companies, valued at around Rs 1,000 crore, were mortgaged to secure the loan, which was repayable within 36 months.

According to the complainant, in June 2018, he learnt that Yes Bank had assigned the mortgaged properties to SARCL for recovery of dues amounting to over Rs 176.5 crore. He alleged that the properties, valued at nearly Rs 1,000 crore, were transferred to SARCL despite the loan account not having been classified as an NPA, and were subsequently sold at prices significantly below their market value.Sources said that when banks transfer bad loans to ARCs, along with the mortgage properties, agreements are often entered into regarding the sharing of recoveries generated from the sale of mortgaged assets. In the present case, investigators are examining allegations that SARCL sold certain mortgaged properties at undervalued rates to entities linked to its associates, thereby reducing the amount required to be shared with the bank.

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