08:33 GMT29 November 2020
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    New Delhi (Sputnik): India’s central bank suspended the board of troubled private sector lender Yes Bank on 5 March, as it had “undergone a steady decline largely due to the inability of the bank to raise capital to address potential loan losses”. A day later, the Reserve Bank of India also announced a reconstruction plan for bank.

    India’s economic intelligence agency, the Enforcement Directorate (ED) launched a probe into money laundering charges against Rana Kapoor, a promoter of Yes Bank. On Sunday, after over a day of interrogation, Kapoor was arrested on charges of getting kickbacks of over $80 million from a scandal-hit home construction financing company for access to Yes Bank loans worth over $600 million.

    According to media reports, the ED is slated bring Kapoor before a designated court on Sunday. The Times of India reported that Yes Bank issued a  $600 million loan to Dewan Housing Finance Corporation (DHFC) and another loan to the tune of over $100 million to a real-estate subsidiary of DHFC. ED charged Kapoor with fraud for taking a kickback from DHFC through a shell company controlled by him and two of his daughters; DHFC had defaulted on its loan payments.

    Reserve Bank of India (RBI) had on Saturday (7 March) announced a revival plan “in the public interest and in the interest of the bank’s depositors” and put a monthly cap of $675 (approximate) on withdrawals by account holders.

    As part of the revival plan, the state-run State Bank of India announced plans on Saturday to buy up to 49 percent of the equity in Yes Bank. RBI had approached several potential investors to pick up stakes as private lenders.

    Yes Bank, headquartered in India’s economic capital Mumbai, had been facing trouble regarding the quality of its assets, with a huge burden of bad loans causing stress in its balance sheet. Of late, the bank had been trying in vain to find investors to shore up its capital base,.


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    Reserve Bank of India, Mumbai, New Delhi, India
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