People stand near motorcycles parked in front of signage for Yes Bank Ltd. in Mumbai, India (Photographer: Adeel Halim/Bloomberg)  

Yes Bank’s Kapoor Family Repays Rs 400 Crore To Two Mutual Funds

Entities linked to one of the promoters of Yes Bank Ltd. have paid Rs 400 crore to two mutual funds from whom they had raised funds by pledging shares.

The entities are understood to be linked to the close family members of Rana Kapoor, the chief executive and one of the promoters of the bank. While Rana Kapoor and his family own 9.8 percent, Madhu Kapur, his sister-in-law and the widow of the deceased Ashok Kapur and her family, own around 9 percent in the fifth largest private sector lender.

The Kapoor family paid Rs 200 crore each to Reliance Mutual Fund and Franklin Templeton Mutual Fund, sources said Monday, adding this was a prepayment of the due amount. With this payment, the overall outstanding of the promoter group’s borrowing has come down to Rs 1,400 crore, they added.

The promoter group entities are understood to have borrowed by pledging shares for investing in other ventures and have paid off once the adequate liquidity was available, the sources said.

After the Reserve Bank of India shot down a three-year-term re-appointment of Rana Kapoor as MD and CEO, to Jan. 31, 2019, the share price of the bank has more than halved. That has raised concerns among the mutual funds, as the shares were the primary security against which the loans were given and fund houses feared booking mark-to-market losses.

Kapoor reportedly invited the regulatory ire after the bank had under-reported bad loans worth over Rs 10,000 crore for consecutive years in 2015-16 and 2016-17. The monetary authority officially gave no reason for its decision though.

The overall security cover is valued at Rs 5,000 crore at the current stock price, which is over three times the outstanding, the sources claimed. Though it is not exactly known at what price the shares were trading when they were pledged or when the money was raised.

Kapoor had said he did not intend to sell his holding in the bank, even after he leaves the bank.

A news report Monday said there was no breach of convenants in borrowing against shares done by the promoter family and added the scrip may witness choppy trade.

The Yes Bank scrip tanked 3.9 percent to Rs 187.95 on the BSE as against a 1.07 percent rally on the benchmark, making it the biggest loser.

Also read: India Is Missing the Wake-Up Call From Its Shadow-Bank Bust