BREAKING NEWS: ED raids Yes Bank founder Rana Kapoor’s Mumbai residence; look out notice issued

MUMBAI: Enforcement Directorate on Friday (March 6, 2020) conducted raids at Yes Bank founder Rana Kapoor's Mumbai residence hours after the government and the RBI assured the bank’s depositors that their money was safe and there was no need to panic.

According to sources, the raid is being carried out at Kapoor's Samudra Mahal residence in the western metropolis. The action is being conducted under the Prevention of Money Laundering Act (PMLA) and is aimed at collecting more evidence.

The ED is probing Kapoor's role in connection with the disbursal of a loan to a corporate entity and the alleged kickbacks that were reportedly received in his wife's accounts. Some other alleged irregularities are also under the agency's scanner, sources claimed.

A case against Kapoor under the Prevention of Money Laundering Act (PMLA) has already been registered. A Look Out Notice has been issued against Rana Kapoor to prevent him from leaving the country.

The ED action came hours after the Reserve Bank of India (RBI) took control of troubled private sector lender Yes Bank due to a serious deterioration in its financial position, the Narendra Modi government on Friday (March 6, 2020) assured thousands of the bank's depositors that their money is safe and there was no need to panic.

Finance Minister Nirmala Sitharaman said the government has asked the Reserve Bank of India to look into factors that led to the present financial crisis in the Yes Bank and assign individual responsibilities.

‘’Yes Bank has been under watch since 2017 and developments relating to it were being monitored on a day-to-day basis,’’ the FM said. 

"Since 2017, the central bank noticed governance issues and weak regulatory compliance at Yes Bank, besides wrong asset classification and risky credit decisions," she added.

The bank took many risky credit decisions, and the RBI had advised a change in its management, Sitharaman said adding such decisions were taken in the interest of the bank`s health. 

A new CEO was appointed in September 2018 and cleaning up of bank started and the investigative agencies too found irregularities, she said. Sitharaman said the RBI has been asked to assess the causes of problems and identify the role played by individuals. The Finance Minister also said that employment and salary of Yes Bank employees has been assured for one year.

The restructuring scheme will be fully effective within 30 days, she said adding that the State Bank of India has expressed willingness to invest in Yes Bank.

Meanwhile, the RBI also announced a draft scheme for the revival of Yes Bank and said that India`s biggest lender State Bank of India has expressed its willingness to make investments in Yes Bank and participate in its reconstruction scheme.