Yes Bank walked away just when a deal appeared to be close to fruition. For a while, the
Reserve Bank of India and the government, which were keeping tabs on the bank, were mystified as to why this was happening.
The puzzlement gave way to suspicion that ousted promoter
Rana Kapoor had a hand in sabotaging a turnaround plan after the 62-year-old, now in ED’s custody, started sending feelers to the government and the RBI indicating his keenness to return to the bank, according to highly placed sources close to the developments. In one case, the RBI had even told a marquee investor that it could deposit money in an escrow account. “Every time things appeared to be heading towards finality, his people would meet potential investors and probably talk them out of it,” a top government source told TOI.
Finally, in an attempt to lure Kapoor back from London—where he’d been camping for several months—the RBI is said to have conveyed an impression that given the failed attempts to attract new investors, it might be open to him returning to the bank he had co-founded in 2004.
But as soon as he returned, multiple investigative agencies mounted surveillance on him to ensure he did not flee the country. In fact, sources said, there were a few nervous occasions when he went off the radar briefly.
During a visit to the sea-facing apartment building in Worli—one of the most expensive in Mumbai, and the country— where Kapoor lived (as did fugitive diamantaire
Nirav Modi), ED officials were told by the building guards they had cultivated that there were signs that Kapoor was planning to leave India again, prompting them to tighten vigil. He may have realised that the RBI and government were considering a reconstruction plan that didn’t involve him.
With a board meeting of the bank scheduled for March 14 to consider quarterly results, there was mounting concern within the financial sector that Yes Bank’s bad loans—disclosed at about Rs 16,000 crore in September—were approaching crisis proportions, and could trigger a wider meltdown. Large depositors with their ear to the ground had already started to pull their money out.
Within government, there had been some debate as to whether Kapoor should be arrested—risking loss of confidence in the bank—or if the focus should be on getting new investors led by State Bank of India. With time running out, the government decided to bite the bullet—almost simultaneously imposing a moratorium, announcing a reconstruction plan, and green-lighting action against Kapoor. Moratoriums are generally kept for the weekend, when markets are shut and economic activity is at a low, and this was the last weekend before March 14.