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Enforcement Directorate arrests Yes Bank founder Rana Kapoor over money laundering charges

Kapoor was questioned for over 20 hours by the central agency on Saturday, finally leading to his arrest on Sunday morning.

The founder of the crisis-hit YES Bank, Rana Kapoor, was arrested by the Enforcement Directorate (ED) on Sunday around 3 am in Mumbai. He was arrested under the Prevention of Money Laundering Act (PMLA), following allegations of mismanagement and financial irregularities.

Earlier, his upscale residence in ‘Samudra Mahal’ complex in Worli area was raided by the ED on Friday night. Reportedly, Kapoor was questioned for over 20 hours by the central agency on Saturday, finally leading to his arrest on Sunday morning.

The Enforcement Directorate was investigating whether a dummy company controlled by Kapoor and two of his daughters, Doit Urban Ventures, received kickbacks to the tune of ₹600 crores in return for granting a ₹4,450 crore loan to Dewan Housing Financial Corporation Limited (DHFL).

Despite the firm failing to return the money, the Yes Bank management did not initiate any action. Officials suspect that DHFL had siphoned off ₹13,000 crores (including the ₹4,450 crore Yes Bank loan) through 79 dummy companies.

Kapoor is also believed to be involved in Employees’ Provident Fund (PF) where the Uttar Pradesh Power Corporation Ltd. (UPPCL) invested ₹4,100 crore worth of funds in DHFL without seeking required approval.

The Enforcement Directorate had also searched the residences of Kapoor’s 3 daughters on Saturday as the officials believe that they are “linked to some companies to which the suspected “proceeds of crime” have been traced.”

Yes Bank became the second bank to collapse in the financial year on Thursday after the Reserve Bank of India imposed restrictions on it, after a similar fate faced by Punjab and Maharashtra Cooperative Bank in September last year.

After the bank was in financial trouble for almost two years, RBI finally decided to take action, and imposed a moratorium on the bank for 30 days, along with taking over the management of the bank. The regulator has imposed a cap of ₹50,000 on withdrawals from accounts in the Yes Bank for a month.

On Friday, the Reserve Bank of India today published a draft of the scheme of reconstruction for the troubled private sector bank. Public sector bank State Bank of India will infuse capital in Yes Bank by acquiring 49% stack.

After SBI picks up the stake, a new board will be constituted for the bank, and the administrator appointed by RBI will hand over the control of the bank to the newly formed board. State Bank of India will nominate two directors in the board of directors, while RBI may appoint additional directors exercising its powers.

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