Lapses, irregularities, round tipping: Yes Bank's Rs 500 crore loan sale under scanner
Investigators noted that just weeks before the deal, YES Bank sanctioned about Rs 199 crore in term loan and cash credit facilities to Fortune Integrated Assets Service Ltd., a company associated with the Suraksha group.In March 2017, the bank reportedly increased the cash credit limit by another Rs 100 crore. A portion of these funds allegedly went into Suraksha ARC's account to facilitate the acquisition of the HDIL loan.The report flagged this routing of funds as a serious control and compliance concern. In several instances, the bank is said to have allowed group-linked entities to use sanctioned credit lines to make cash margin payments in ARC transactions, undermining the purpose of risk transfer.The audit also found that the HDIL loan transfer to Suraksha ARC took place without competitive bidding or independent valuation. Certain stressed accounts classified as SMA-2 loans on the verge of becoming non-performing assets were allegedly sold without proper disclosure or market testing.Between 2016 and 2018, Suraksha ARC emerged as a key buyer of YES Bank's distressed assets, acquiring exposure worth more than Rs 2,700 crore. In FY17 alone, Suraksha ARC accounted for 98 per cent of the bank's asset sales to reconstruction companies, raising concerns over potential preferential treatment.By the time Suraksha ARC filed its claim in HDIL's insolvency proceedings, the loan - carrying a 14.25 per cent interest rate and an additional 2 per cent penalty - had risen to nearly Rs 700 crore.Under the proposed resolution plan for HDIL's guarantor group, still pending before the National Company Law Tribunal, Suraksha ARC may recover only about Rs 150 crore, representing a write-down of over 75 per cent.The audit findings come amid renewed scrutiny of YES Bank's lending and restructuring decisions prior to 2020, and the matter is now under the radar of regulatory and investigative agencies, with potential implications for the bank, Suraksha ARC and the wider asset recovery sector.(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)- EndsTune InMust Watch
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