Rs 600 Cr Yes Bank Loan Case: Rakesh Wadhawan Moves Mumbai Police’s EOW Against Sudhir Valia, Rana Kapoor

Former HDIL promoter Rakesh Wadhawan sought an EOW probe, alleging RBI norm violations and irregularities in Yes Bank's Rs 600-crore loan transfer to Suraksha ARC.


Mumbai: Former Housing Development and Infrastructure Ltd (HDIL) promoter and suspended director of Privilege Power and Infrastructure Pvt Ltd (PPIPL), Rakesh Wadhawan, has approached the Mumbai Police’s Economic Offences Wing (EOW), alleging serious irregularities in the assignment of his company’s Rs 600-crore loan account by Yes Bank to Suraksha ARC-11 Trust and seeking a criminal investigation against former Yes Bank Managing Director Rana Kapoor, Suraksha Asset Reconstruction Pvt Ltd promoter Sudhir Valia and others.


In a 16-page complaint submitted to the EOW, Wadhawan alleged that the loan account was assigned to the asset reconstruction company despite never being classified as a non-performing asset (NPA), in violation of Reserve Bank of India (RBI) guidelines governing the sale of stressed assets.


The complaint pertains to a Rs 600-crore term loan sanctioned by Yes Bank for development of PPIPL’s affordable housing project at Kopri-Virar in Maharashtra.


Wadhawan claimed that despite the moratorium remaining in force and substantial interest payments being made, the loan account was assigned to Suraksha ARC on March 31, 2017, without ever being declared an NPA. He further alleged that neither any notice of NPA classification nor any prior intimation regarding the assignment was served upon the borrower.


Questioning the legality of the transaction, the complaint alleged that an asset reconstruction company could not have acquired the loan account without it first being classified as an NPA. It also questioned the valuation and sale process, alleging that no independent valuation, transparent price discovery or competitive bidding exercise was undertaken despite the underlying securities being worth several times the outstanding loan exposure.


Wadhawan has relied upon what he described as an internal Yes Bank forensic review report which, according to him, recorded that outstanding dues of around Rs 213.6 crore were assigned to Suraksha ARC for a consideration of Rs 155.3 crore. The complaint alleged that only Rs 23.3 crore of the purchase consideration was paid in cash, while the balance comprised security receipts retained by Yes Bank.


One of the central allegations in the complaint relates to what Wadhawan described as a possible circular funding arrangement. Citing the alleged findings of the internal audit, he claimed that funds moved from Yes Bank to Fortune Integrated Assets Service Ltd, then through Suraksha Realty, Khyati Realtor Pvt Ltd and Suraksha ARC entities before ultimately reaching a Yes Bank suspense account. According to the complaint, the alleged money trail raises questions over whether entities financed by Yes Bank indirectly funded Suraksha ARC’s acquisition of the PPIPL loan account.


The complaint further alleged that Yes Bank enhanced credit facilities to Fortune Integrated Assets Service Ltd shortly before the assignment, contending that the timing of the enhancement warranted investigation.


Wadhawan also referred to a recent order of a Mumbai sessions court rejecting the anticipatory bail application of Suraksha ARC promoter Sudhir Valia in another matter relating to Sapphire Land Development Pvt Ltd, another HDIL group company.


According to the complaint, the court had made prima facie observations regarding alleged collusion between certain Yes Bank officials and Suraksha ARC, alleged violations of banking procedures and RBI guidelines, and observed that custodial interrogation was necessary in that case. While acknowledging that the observations related to a separate transaction, Wadhawan contended they reinforced the need for a detailed probe into the assignment of the PPIPL loan account.


In his complaint, Wadhawan urged the EOW to examine the legality of the assignment, verify the source of funds used by Suraksha ARC, scrutinise valuation reports, board approvals, RBI compliance records and bidding documents, and investigate the role of all officials and entities allegedly involved in the transaction.


News is originally taken from: https://bit.ly/3RuFEmx


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