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- Published: August 4, 2023 17:56
New Delhi: The Supreme Court of India on Friday dismissed the bail plea of Rana Kapoor, the founder of Yes Bank, in connection with a high-profile money-laundering case. The apex court cited the gravity of the case, emphasizing its far-reaching impact on the entire financial system.
Rana Kapoor, who has been in judicial custody since March 2020, is facing charges related to the DHFL money laundering case. Initially arrested in connection with alleged irregularities amounting to ₹900 crore in loans sanctioned to Housing Development and Infrastructure Limited (HDIL) promoters, Rakesh Wadhawan and his son Sarang Kapoor are now entangled in multiple cases linked to money laundering.
In a significant development last month, the market regulator, the Securities and Exchange Board of India (Sebi), issued a notice to Rana Kapoor, demanding payment of ₹2.22 crore concerning a case of mis-selling Yes Bank’s Additional Tier-1 (AT1) bonds to retail investors.
Sebi’s notice specified that if Kapoor fails to settle the dues within 15 days (by 8 August), the market regulator will resort to attaching and selling his movable and immovable assets to recover the amount.
What was the Yes Bank scam case?
The case revolves around the mis-selling of Yes Bank’s AT1 bonds to retail investors by the bank’s officials. It was alleged that the bank and certain executives omitted to inform investors of the risks involved in trading the AT-1 bonds in the secondary market. The sale of these bonds commenced in 2016 and continued until 2019.
Sebi’s order highlighted Kapoor’s direct involvement in overseeing the entire operation related to the secondary sale of AT-1 bonds. He was reported to have regularly received updates from the team and issued further instructions to increase sales, putting pressure on officials to escalate the transactions. The regulator held Kapoor accountable for acts of misrepresentation, suppression of material facts, manipulation, and mis-selling of Yes Bank’s AT-1 bonds to individual investors.
Additionally, it was alleged that Kapoor exerted pressure on the private wealth management team to devise a deceptive scheme to offload the AT-1 bonds onto Yes Bank customers.
The Supreme Court’s decision to deny bail to Rana Kapoor comes as a significant setback for the embattled founder, further prolonging his stay in judicial custody. The case has garnered widespread attention due to its potential ramifications for the Indian financial sector, raising concerns about corporate governance, regulatory oversight, and investor protection.