The Yes Bank Scam
Abstract
This article focuses on recent fraud case commonly known as the Yes Bank Scam. This
private bank was incorporated on November 21, 2003. It’s founded by three people namely
Rana Kapoor, Ashok Kapur and Harkirat Singh. Rana ultimately became the only founder
left but was able to build the bank’s loan business1. However due to family dispute and
exposure to bad loans and RBI’s audit of the banks in India, things eventually led to the
downfall of the Yes Bank.
Keywords
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Yes Bank
Fraud
Yes Bank Crisis
Rana Kapoor
Introduction: Brief History of the Bank
The Yes bank had grown to be the 4th largest private sector bank in the country at its peak.
The bank had initially established a customer-centric and service-driven bank for the future
corporates of the country. It had released its Initial public offering and kept developing up to
the 2008 global financial crises. Harkirat Singh, on one hand had left the bank at an initial
stage and on the other hand Ashok Kapur had unfortunately died in the 2008 terrorist attack
in Mumbai leaving Rana to be the only founder left. In order to achieve success the bank had
started to focus on its operations rather aggressively.
Details of the Case
Yes Bank’s financial position had been declining steadily and it was mostly because of the
inability to raise capital. The bank had undergone grave governance issues and practices in
recent years, which encouraged the decline. The bank had to struggle a lot to raise the basic
capital required to stay above regulatory requirements as it had a very high levels of bad
loans. It is to be note that the bank has more corporate customers than retail customers as well
as the fact that most of the companies. The bank gave loans to companies that were at loss.
The fact that these companies by themselves were sinking and on the verge of bankruptcy
was also a reason that increased the bad loan of the bank2.
Rana Kapoor had sold his entire stake in the bank in November 2019, after it turned out that
Yes Bank had be completely become unbankable. Rana Kapoor is currently in Enforcement
Directorate’s custody on charges of money laundering, registered by the CBI. The case
Rajan, D. T. (2019, October 16). The Case of Yes Bank: From the Founders’ Dream to a Bank in Distress.
Researchgate.
https://www.researchgate.net/publication/338211439_The_Case_of_Yes_Bank_From_the_Founders’_Dream_t
o_a_Bank_in_Distress
2
Bankedge, A. (2020, March 12). A CASE STUDY ON YES BANK… THE REAL STORY. BANKEDGE |
Professional Certification Courses In Banking. https://bankedge.in/a-case-study-on-yes-bank-the-real-story/
1
revolves around an alleged bribe of Rs 600 crore by the DHFL to the Rana Kapoor family on
a quid pro quo basis.
CBI on March 7th 2020 registered a case for alleged cheating, fraud, criminal conspiracy in
sanctioning of loans by YES Bank and in exchange receiving bribes from DHFL promoter
Dheeraj and Kapil Wadhawan.
The charge sheets had also included DHFL, its promoters Wadhawans, DOIT Urban
Ventures Ltd, owned by Kapoor's daughters, as an accused in the said scam case. According
to CBI, during his tenure Rana Kapoor had extended credit facilities to DHFL by means of
YES Bank and in exchange received large monetary benefits for himself as well as the
hundreds of companies controlled by him and his family3.
The Reserve Bank of India had on March 5th 2020 imposed a 30-day moratorium on YES
Bank. According to the terms of the said moratorium, deposit withdrawals were allowed only
at Rs 50,000 per person. The central bank has also proposed a reconstruction scheme4.
Rana Kapoor v. Enforcement Directorate
Initially the Yes Bank fraud case against Rana Kapoor was sent to a Metropolitan Magistrate
for trial5. A magistrate court had rejected the pleas for the bail that were filed on merit by the
Wadhawans, the promoters of DHFL, in this case6. Later on the 9th of April, the Wadhawans,
out on bail, along with a group of 23 other people had disobeyed lockdown rules and
travelled after a senior IPS officer had issued a letter allowing them to travel. The Wadhawan
brothers, on 18th April had gotten an interim relief from arrest after their lawyer pleaded that
they shouldn’t be arrested in the middle of the pandemic7.
The Bombay High Court had recently observed that the large amount of loss in the public
funds by the alleged account of criminal activities of Rana Kapoor’s various companies
should be viewed seriously and he was denied bail in the case.
Justice Prakash Naik had noted while rejecting Kapoor’s bail plea on January 25th that the
offence is of a grave nature and there is a presence of a large amount of evidence that shows
the Kapoor’s involvement in the crime. The justice also noted that it is settled law that while
granting bail the Court has to keeping in mind the nature of accusations, evidence in support
thereof. The justice had stated that such huge loss of public funds are to be viewed seriously
and with regard to the instant case and the magnitude of the offence as well as considering
the evidence on record no bail can be made out.
3
Choudhary, S. (2020, June 25). YES Bank loan fraud: CBI charges Rana Kapoor with criminal conspiracy.
Www.Business-Standard.Com. https://www.business-standard.com/article/current-affairs/yes-bank-loan-fraudcbi-charges-rana-kapoor-with-criminal-conspiracy-120062501509_1.html
4
Business Standard. (n.d.). WHAT IS YES BANK CRISIS? Business-Standard. Retrieved February 6, 2021,
from https://www.business-standard.com/about/what-is-yes-bank-crisis
5
Yes Bank fraud case against Rana Kapoor sent to a Metropolitan Magistrate for trial. (2020, July 17). The
Economic Times. https://economictimes.indiatimes.com/news/politics-and-nation/yes-bank-fraud-case-againstrana-kapoor-sent-to-a-metropolitan-magistrate-for-trial/articleshow/77024669.cms?from=mdr
6
Correspondent, S. (2021, January 8). Yes Bank fraud case: bail pleas of Wadhawan brothers rejected. The
Hindu. https://www.thehindu.com/news/cities/mumbai/yes-bank-fraud-case-bail-pleas-of-wadhawan-brothersrejected/article33532668.ece
7
Ibid
The Court was of the opinion that the honest governance of banks and financial institutions
are critical for the proper functioning of the banking sector as well as the economy8.
Kapoor is accused of entering into criminal conspiracies with Kapil Wadhawan, Director of
Dewan Housing Finance Corporation Ltd (DHFL). As mentioned before one of the key
contentions of the case revolved around the amount that Wadhawan is said to have paid
kickbacks of Rs. 600 crores to Kapoor by extending a loan to DOIT Urban Ventures (India)
Pvt. Ltd. The ED contented that the loan of Rs. 600 crores was sanctioned by DHFL, whereas
the senior advocate appearing for Kapoor stated that the said amount was a genuine loan and
urged for grant of bail9.
However after hearing both sides at length, the Court was of the view of the allegation that
Kapoor had deliberately used, projected and claimed proceeds of crime as untainted by
laundering the same for personal gain after observing the position of power and authority that
he had as the MD/CEO of the YES Bank.
The averments in the bail plea also concerned the health condition of Kapoor. The Court was
informed that Kapoor's health has been rapidly deteriorating while in jail. The Court noted
that the medical issue was there prior to his arrest and directed the jail authority to provide
appropriate medical treatment to Kapoor.
Conclusion
The whole situation had raised quite the unrest among the people and very rightfully so. The
huge loss of the public fund led many to loss and question the safety of the deposited in the
bank. The whole situation also rendered the bank with lesser deposits and to a point where it
was unable to raise capital.
However the RBI stated that SBI is willing to make an investment in Yes Bank Ltd. and
participate in its reconstruction scheme. Thus by sub-section (4) of section 45 of the Banking
Regulation Act, 1949, the Reserve Bank of India, proposed the details of the scheme for
raising fresh capital for Yes Bank.
References


8
Rajan, D. T. (2019, October 16). The Case of Yes Bank: From the Founders’ Dream
to a Bank in Distress. Researchgate.
https://www.researchgate.net/publication/338211439_The_Case_of_Yes_Bank_From
_the_Founders’_Dream_to_a_Bank_in_Distress
Bankedge, A. (2020, March 12). A CASE STUDY ON YES BANK… THE REAL
STORY. BANKEDGE | Professional Certification Courses In Banking.
https://bankedge.in/a-case-study-on-yes-bank-the-real-story/
Joshi, N. (2021, February 5). [YES Bank scam] Huge loss of public fund should be viewed seriously: Bombay
High Court refuses to grant bail to YES Bank founder Rana Kapoor. Bar and Bench - Indian Legal News.
https://www.barandbench.com/news/litigation/rana-kapoor-bail-rejected-bombay-high-court-order
9
Ibid
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


Choudhary, S. (2020, June 25). YES Bank loan fraud: CBI charges Rana Kapoor with
criminal conspiracy. Www.Business-Standard.Com. https://www.businessstandard.com/article/current-affairs/yes-bank-loan-fraud-cbi-charges-rana-kapoorwith-criminal-conspiracy-120062501509_1.html
Business Standard. (n.d.). WHAT IS YES BANK CRISIS? Business-Standard.
Retrieved February 6, 2021, from https://www.business-standard.com/about/what-isyes-bank-crisis
Yes Bank fraud case against Rana Kapoor sent to a Metropolitan Magistrate for trial.
(2020, July 17). The Economic Times.
https://economictimes.indiatimes.com/news/politics-and-nation/yes-bank-fraud-caseagainst-rana-kapoor-sent-to-a-metropolitan-magistrate-fortrial/articleshow/77024669.cms?from=mdr
Correspondent, S. (2021, January 8). Yes Bank fraud case: bail pleas of Wadhawan
brothers rejected. The Hindu. https://www.thehindu.com/news/cities/mumbai/yesbank-fraud-case-bail-pleas-of-wadhawan-brothers-rejected/article33532668.ece
Joshi, N. (2021, February 5). [YES Bank scam] Huge loss of public fund should be
viewed seriously: Bombay High Court refuses to grant bail to YES Bank founder
Rana Kapoor. Bar and Bench - Indian Legal News.
https://www.barandbench.com/news/litigation/rana-kapoor-bail-rejected-bombayhigh-court-order