Yes Bank case: SC dismisses pre-arrest bail plea of DHFL promoters Dheeraj & Kapil Wadhawan
The Supreme Court on Friday declined to entertain pleas seeking anticipatory bail for DHFL promoters Dheeraj Wadhawan and Kapil Wadhawan in a money laundering case of Yes Bank under investigation by the Enforcement Directorate (ED).
 
A bench of Justices Sanjay Kishan Kaul and B.R. Gavai dismissed the pleas after counsel appearing for Wadhawans contended they are not pressing for relief. 
 
The Wadhawans moved the apex court challenging the Bombay High Court declining to entertain their anticipatory bail. Solicitor General Tushar Mehta, representing the ED, contended before the bench that the accused have been arrested and their pleas for pre-arrest bail hold no value anymore. The apex court dismissed the pleas as withdrawn.
 
The High Court, declining their pleas for pre-arrest bail, held that their interrogation was required to uncover the conspiracy. It observed that they were not co-operating, and the ED had issued several summonses seeking their presence for questioning. Although the Wadhawans responded to the summons, they did not appear before ED, it noted.
 
The Wadhawans were arrested by the CBI in another case in connection with the Yes Bank scam. The ED is separately probing allegations of Rs 600 crore paid to a company controlled by the bank's former CEO Rana Kapoor and his family members by a company linked with the scam-tainted DHFL. 
 
The Wadhawans were arrested in April by the CBI in the Yes Bank scam. The investigative agencies are also probing the transactions between Kapoor's family and the Wadhawans of DHFL, which is facing insolvency proceedings and owes creditors around Rs 36,000 crore.
 
The CBI has said investigations by its Economic Offence Wing into alleged deals worth Rs 5,050 crore found the Kapoor family received kickbacks in exchange for giving Yes Bank loans to the Wadhawans of DHFL through various channels and in gross violation of rules.
 
Kapoor is said to have used investment companies to get undue benefits from the Wadhawans after influencing Yes Bank to extend large loans to DHFL and other Wadhawan companies by flouting rules, according to the CBI.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    COMMENTS

    tillan2k

    4 days ago

    Wadhwans should be ordered to service corona ward patients for 2 months without mask and PPE .

    REPLY

    rs235m

    In Reply to tillan2k 4 days ago

    They will steal ventilators ,beds etc and sell them

    rs235m

    7 days ago

    My fixed deposit of Rs. 7 lakhs has not been refunded. While accepting the deposit they ask so many documents as if we are getting loan from DHFL. Finally Wadhavan has proved himself to be a coat suit cheat.Government should auction all his assets including his coat and suit to refund deposits. I understand that he floated 12 shell companies and paid a part to political party. Na kavoonga na kaane doonga?

    Modi Govt Takes a Historic Step Placing Cooperative Banks under RBI’s Full Supervision through an Ordinance
    On 24th June, the Union government issued an ordinance to bring 1,482 urban cooperative banks and 58 multi-state cooperative banks under the direct supervision of the Reserve Bank of India (RBI). This big step takes forward its failed attempt to do this through an amendment to the Banking Regulation Act just before the COVID-19 pandemic broke out. 
     
    The ordinance will give RBI the same powers of supervision over cooperative banks as it does over scheduled cooperative banks and also a say in key appointments. This means that RBI will now be fully responsible if cooperative banks continue to fail with the same chilling regularity as they have, under shared regulation with the registrar of cooperatives, in the past few decades. 
     
    Most cooperative banks are controlled by powerful politicians, which explains their poor supervision and the lack of political will to change things, despite the regular losses suffered by innocent depositors. The argument to retain status quo has been that these banks cater to under-banked rural India and, hence, need more leeway and indulgence. This excuse is still trotted out, decades after a combination of microfinance, the spread of non-banking and fintech companies have established a better reach to the target customers claimed by undercapitalised and poorly-supervised cooperative banks. 
     
    Moneylife has repeatedly warned savers to be wary of cooperative banks which fail at an average of at least one every month. In case after case, RBI imposes restrictions on lending and withdrawals, years after warning signs and weaknesses are evident. The banks then remain in a zombie state for years before they are wound up and their licence is cancelled. Depositors are often denied even the pitiful deposit insurance of Rs1 lakh for several years, until the bank is finally liquidated. Since no previous regime has wanted to change this, one can only welcome the government’s action, whatever the motivation behind it. 
     
    Remember, this government led by the Bharatiya Janata Party (BJP) itself started its innings with the most brazen support for these badly supervised banks. In November 2014, it was the first government ever to legitimise even unlicensed cooperative banks (yes, RBI had discovered that there were at least 23 banks operating without a licence) with a massive Rs2,375.42 crore bailout. So powerful is the political protection for these banks that, in 2011, it was discovered that as many as 28 of them had continued to operate despite a negative net worth.
     
    Political pressure wasn’t the only reason for this state of affairs. RBI itself is notoriously reluctant to do anything that increases its work and supervisory responsibility. Despite hundreds of cooperative banks having failed in the past few years, as a category, they are still the biggest chunk at over 1,400, compared to just over 100 scheduled commercial banks. 
     
    Bringing cooperative banks under RBI’s exclusive supervision increases its accountability and it would be no surprise if there was a lot of internal resistance to the move. In fact, RBI has a notorious record of refusing to act even when whistleblowers at cooperative banks—like Bombay Mercantile Cooperative Banks—have exposed corruption and loot, with documentation. 
     
    In September 2018, the government allowed cooperative banks to convert to small finance banks. But with only one bank receiving ‘in principle’ approval to become a small finance bank in January 2020, that is clearly a damp squib.
     
    Is the failure of Punjab and Maharashtra Cooperative Bank (PMC Bank), a turning point for supervision of cooperative banks? Probably. Although the finance ministry has steadfastly ignored the plight of depositors, their sustained campaign is certainly a political embarrassment for the NDA government, especially BJP leaders from Maharashtra who have cold-shouldered PMC Bank victims. There is a lot of anger within RBI itself, since its own officials have lost nearly Rs200 crore invested by two separate cooperatives of RBI officers and clerical staff.
     
     
    Meanwhile, after a three-party coalition government was formed in Maharashtra, the Nationalist Congress Party (NCP) is playing to the gallery on PMC Bank. In February this year, it proposed a merger with Maharashtra State Cooperative Bank (MSCB), controlled by NCP big guns. 
     
    MSCB has been extremely controversial. RBI had ordered an investigation and clean-up in 2010-11. An investigation by the National Bank of Agriculture and Development (NABARD) had revealed that MSCB’s former management was guilty of exactly the same kind of fraudulent activities that felled PMC Bank. Can RBI possibly consider MSCB ‘fit and proper’ to acquire PMC Bank? Does MSCB really have the financial strength to take on the massive losses of PMC Bank, which are reportedly in excess of Rs6,000 crore, even though it seems to have turned around, recording a Rs251 crore profit for year ended 31 March 2019? 
     
    Following a directive of the Bombay High Court (HC), the economic offences wing of the Mumbai police had to initiate action in August 2019 against the present deputy chief minister Ajit Pawar and 70 others in what was billed as a Rs25,000 crore scam. Unsurprisingly, the investigation has lost momentum after the NCP became a key member of the ruling triumvirate. But the political jostling over banks continues and the ruling coalition went after Axis Bank and forced many government and police accounts to shift away from the Bank, alleging that it was favoured by former chief minister Devendra Fadnavis, since his wife worked with the Bank. 
     
    RBI could have avoided this embarrassing and politically sensitive situation if it had acted quickly and appointed a strong administrator with a mandate to find buyers for PMC Bank. Indeed, this was among the suggestions made to the government by Moneylife soon after the PMC Bank collapse. The COVID pandemic has made the job of finding a suitor for PMC Bank more difficult and, at the same time, exacerbated the difficulties of depositors who have lost their jobs as well as their savings in the lock-down.
     
    NCP’s political gimmick, of proposing a merger with the MSCB, puts Maharashtra BJP’s leaders in a spot. PMC Bank depositors don't care about the antecedents of MSCB or the motivation of the NCP, so long as they get access to their own hard-earned money. They also feel badly let down by BJP leaders who, probably taking a cue from the central leadership, have done nothing to help or even facilitate a dialogue with the authorities. 
     
    The ordinance to bring all cooperative banks puts a new spin on events. It brings all the politically controlled cooperative banks in Maharashtra under RBI supervision and scrutiny. But will we really see a clean-up? Maharashtra, along with Gujarat and Andhra Pradesh has the largest concentration of politically controlled, badly regulated cooperative banks. In Maharashtra, it is the NCP and the Congress which had a strong hold over these banks as well as cooperative institutions. 
     
    As part of the MSCB scandal, the Maharashtra government has even had to cough up over Rs1,000 crore, following a Supreme Court order, on account of loans guaranteed on behalf of politically controlled sugar factories, spinning mills and agricultural units. But, lest we forget, some powerful politicians in this sector defected to the BJP before the Maharashtra state elections.
     
    The ordinance is, indeed, a very positive move; but is it only a part of political gamesmanship or will lead to a clean-up and reduce political control over cooperative banks? How will the conflicting interests of the NDA’s newly acquired state leaders affect the process? Nobody seems to have a clue.  
     
    We can only hope that it also helps end the misery of PMC Bank depositors and it finds a better suitor for the Bank. RBI governor, Shaktikanta Das, has always maintained that he is working at a resolution. With the lock-down ending and stock markets rising, maybe RBI hasn’t missed that opportunity altogether. 
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    COMMENTS

    DeepakSB

    2 days ago

    Since lockdown RBI's email IDs are unattended ,mail boxes are FULL and emails sent to these ID bounces.
    How RBI is working during lockdown and complaints against banks remains unattended !!! Anyway afterall RBI is a govt.dept.and will not function pro actively !!!!

    Delivery has failed to these recipients or groups:

    RBI,Mumbai Helpdesk ([email protected])
    The recipient's mailbox is full and can't accept messages now. Please try resending your message later, or contact the recipient directly.

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    rnjoshi63

    1 week ago

    Where is the copy of Ordinance signed by Hon President of India?

    glnprasad52

    1 week ago

    How many co-op banks really exist after one year is yet to be seen. Govt. opened 'Pandora's Box". Knowing the irregularities, as there may be a Public rush on such coop banks, those who know things never disclosed facts to authorities. Once RBI steps in facts may emerge (Do not ask me what RBI has done to rescue so many commercial banks in time). The backbone of the erstwhile strong party is going to break down.

    shirish.s

    1 week ago

    Maharashtra State Co-operative Housing Finance Company Ltd, operating in its own building at BKC nearby Family Court Building, for last thirty years, is doing the only recovery of its loans and not giving fresh housing finance to Co-operative Housing Societies,, as a large number of Congress and NCP have looted this State Housing Finance Company.

    In the year 1990, due to some difference in opinion among the management of MSCB, a new Maharashtra and Goa State Co-operative Co-operative Bank (M&GSCB) was established, with its branches in main cities in these two states.

    Both MSCB & M&GSCB banks had same status. However, within five years of opening, M&GSCB it is seen nowhere.
    Several hundred crores of rupees of M&GSCB were reportedly drowned in its scandal.

    Let some consumer activists groups do an investigation into these two financial institutions of Maharashtra Government

    mantrisuresh1

    1 week ago

    Let's hope this turns a New leaf and the cooperative Bank fiasco is finally over. PMC bank could goYes bank way?

    umeshs62

    1 week ago

    Maharashtra must be spending a fortune year after year in bailing out co-operative banks which are controlled by politicians largely from NCP and Congress. It’s been a day light robbery on a recurring basis. We stupid Indians have learnt to live with it. Our tolerance of corruption, looting, cheating etc. is legendary.

    bala.mathur

    1 week ago

    Great article which lays bare the maladies that plague India's growth story - namely, our corrupt, self serving politicians and our ineffectual bureaucracy. God help PMC Bank depositors.

    CBI files charge sheet against Rana Kapoor, Wadhawans
    The Central Bureau of Investigation (CBI) filed a charge-sheet against Yes Bank founder Rana Kapoor, his family, Dewan Housing Finance promoters and others in the Rs 3,700 crore fraud case, said an official, here on Thursday.
     
    The charge-sheet, filed before the Special CBI Judge, has named Kapoor, his daughter Roshni Kapoor -- promoter of DoIt Urban Ventures (India), DHFL's Kapil R. Wadhawan, Dheeraj R. Wadhawan, and other companies like Belief Realtors and RKW Developers.
     
    It follows a case registered in March by the CBI under various laws, including the Prevention of Corruption Act, against the accused and other unknown entities pertaining to fraud charges against Yes Bank.
     
    On March 9, the CBI searched the premises of the accused. 
     
    In early May, two months after Kapoor's arrest on March 8, even the Enforcement Directorate (ED) filed separate charge-sheet before a Mumbai Special Court with charges under the Prevention of Money Laundering Act.
     
    The ED is separately probing allegations of Rs 600 crore paid to a company controlled by Kapoor and his family members by a company linked with the scam-tainted DHFL.
     
    The Kapoors, including his wife and three daughters, allegedly got huge amounts in kickbacks through the companies owned by them for sanctioning huge loans to some corporate entities that later turned into non-performing assets.
     
    DHFL founders, Kapil Wadhawan and Dheeraj Wadhawan, were arrested in April by the CBI in the same case from Mahabaleshwar, a hill station. They were absconding since the start of the probe.
     
    The CBI has charged that Yes Bank invested Rs 3,700 crore in short-term debentures in DHFL for which the Wadhawans paid Rs 600 crore kickback to Kapoor in the form of a loan to DoIT Urban Ventures, owned by his daughters.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    COMMENTS

    rs235m

    2 weeks ago

    Part with small amount as protection money to get immunity from investigation.

    REPLY

    tillan2k

    In Reply to rs235m 1 week ago

    don't u see the reason for so long delay in filing. in this time charge sheet must have undergoing mutation and abatement in severity

    shirish.s

    In Reply to rs235m 2 weeks ago

    It is the case with all monitory scandals in our country from ancient times.
    All these scam stars they arrange for this stop investigation money well in advance and keep it in a secret place, which is evident from the investigation of recent scam stars.

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