The Enforcement Directorate (ED) on Tuesday carried out searches at 17 locations across Mumbai, Khandala, and Delhi. These locations are linked to Sudhir Valia, the promoter of Suraksha Asset Reconstruction Company Ltd (SARCL), and other senior executives. The searches are part of an investigation into an alleged bank fraud case involving the company and Yes Bank’s former co-promoter Rana Kapoor.
Money Laundering Probe
The ED is investigating a money laundering case that alleges collusion between Asset Reconstruction Companies (ARCs) and Yes Bank. According to the probe, circular transactions were used to fraudulently take over stressed assets. The allegations include undervaluation of auctioned properties and inflated or fraudulent claims.
Background of the Case
The ED’s money laundering case is based on a First Information Report (FIR) filed by the Mumbai Police. The complaint was lodged by a director of Sapphire Land Development Ltd, a sister concern of HDIL, against Kapoor, Walia, and others. According to the police case, Yes Bank, then led by Kapoor, allegedly transferred properties worth nearly Rs 1,000 crore to SARCL. This was done to recover an outstanding loan of about Rs 150 crore, without first classifying the loan account as a Non-Performing Asset (NPA).
Loan and Property Transfer Details
The complaint alleges that Sapphire Land Development Ltd sought a loan of Rs 150 crore from Yes Bank, which was sanctioned in 2016. Properties belonging to HDIL and its group companies, valued at around Rs 1,000 crore, were mortgaged to secure the loan. The loan was repayable within 36 months. In June 2018, the complainant learned that Yes Bank had assigned the mortgaged properties to SARCL for recovery of dues amounting to over Rs 176.5 crore. The complainant alleged that the properties, valued at nearly Rs 1,000 crore, were transferred to SARCL despite the loan account not being classified as an NPA. Subsequently, these properties were sold at prices significantly below their market value.
Investigative Focus
Sources indicate that when banks transfer bad loans to ARCs, along with the mortgage properties, agreements are often made regarding the sharing of recoveries from the sale of mortgaged assets. In this case, investigators are examining allegations that SARCL sold certain mortgaged properties at undervalued rates to entities linked to its associates. This allegedly reduced the amount required to be shared with the bank.
