The Banker Who Crushed His Diamonds

to the financial system. People will forget that Rana shattered the trust in the financial system. And Rana isn’t alone here. Between 2018 and 2020, we saw four financial institutions facing the downfall—IL&FS, DHFL, YES Bank and PMC Bank. And in all the four cases, the management had been idiosyncratic.

In fact, the curbs on withdrawal at PMC Bank forced its largely middle-class depositors to survive on charity and borrowings. The PMC crisis also sparked courtroom battles. In one of them, Sandeep Bhalla, whose parents had nearly Rs 10 lakh blocked in PMC, told the Delhi High Court that the depositors of PMC were ‘discriminated against’ compared to YES Bank’s. The finance ministry told the court that the government had not infused any funds into YES Bank, it was the investors and the SBI who came to its rescue, according to court documents. The SBI is 57 per cent government-owned. The judge wasn’t convinced.

Noting that the PMC depositors were in a ‘dire state’, the court said that the RBI and the finance ministry played a crucial role in rescuing YES Bank and asked them both to ‘delve into the aspect’ of why PMC depositors were treated differently. Having said that, there is always scope for improvement. We have to ensure that our financial sector is well capitalized through stress tests.

Stress testing is a computer-simulated technique to analyse how banks and investment portfolios fare in drastic economic scenarios. Stress testing helps gauge investment risk and the adequacy of assets, as well as evaluating internal processes and controls. Also, the RBI needs to increase its supervisory cadre, along with modernizing it in line with global best practices—and there is apparently a blueprint for it at RBI. Whatever happened to that proposal is anyone’s guess.

¹ Bhupesh Bhandari, ‘LUNCH WITH BS: Rana Kapoor’, Business Standard, 14 June 2013, https://www.business-standard.com/article/opinion/lunch-with-bs-rana-kapoor-105030801008_1.html

² ‘When a Banker Turns Entrepreneur’, Financial Express, 16 November 2003, https://www.financialexpress.com/archive/when-a-banker-turns-entrepreneur/87094/

¹ Anita Bhoir, ‘History Repeating Itself At Yes Bank, Says Harkirat Singh’, Economic Times, 26 June 2013, https://economictimes.indiatimes.com/industry/banking/finance/banking/history-repeating-itself-at-yes-bank-says-harkirat-singh/articleshow/20771853.cms?from=mdr

² Bhupesh Bhandari, ‘LUNCH WITH BS: Rana Kapoor’, Business Standard, 14 June 2013, https://www.business-standard.com/article/opinion/lunch-with-bs-rana-kapoor-105030801008_1.html

³ https://www.moneylife.in/article/earlier-rbi-officials-got-off-with-much-worse-while-dr-chakrabarty-was-mowed-down/7937.html

⁴ https://economictimes.indiatimes.com/industry/banking/finance/banking/history-repeating-itself-at-yes-bank-says-harkirat-singh/articleshow/20771853.cms?from=mdr

⁵ Ritu Sarin, ‘Priyanka’s Sale of Husain Painting to Rana Kapoor Could be Proceeds of Crime: ED’, Indian Express, 24 March 2020, https://indianexpress.com/article/business/companies/yes-bank-crisis-priyankas-sale-of-husain-painting-to-rana-kapoor-could-be-proceeds-of-crime-ed-6328448/

⁶ Anita Bhoir, ‘Rabobank Tweaks Plan for India Presence’, Business Standard, 5 February 2013, https://www.business-standard.com/article/finance/rabobank-tweaks-plan-for-india-presence-107072601064_1.html

⁷ https://www.deccanherald.com/business/business-news/yes-bank-crisis-the-banker-who-crushed-his-diamonds-811863.html

¹ Gopika Gopakumar, ‘Yes Bank Faces Fresh Audit into Complaints by Whistleblower’, LiveMint, 13 November 2019, https://www.livemint.com/industry/banking/yes-bank-faces-fresh-audit-into-complaints-by-whistleblower-11573668757156.html

² Nikhat Hetavkar and Anup Roy, ‘YES Bank’s Handling of Matters Disappointing: Rentala Chandrashekhar’, Business Standard, 20 November 2018, https://www.business-standard.com/article/finance/yes-bank-s-handling-of-matters-disappointing-rentala-chandrashekhar-118112001232_1.html

³ https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=47983

https://www.rbi.org.in/Scripts/PublicationReportDetails.aspx?UrlPage=&ID=939

⁴ Surabhi, ‘Board United on Raising As Much Capital As Needed: Ravneet Gill’, 4 October 2019, https://www.thehindubusinessline.com/money-and-banking/board-united-on-raising-as-much-capital-as-needed-ravneet-gill/article29592662.ece

¹ ‘New YES Bank CEO Ravneet Gill Is a Cricket and Art Fan’, Economic Times, 24 January 2019, https://economictimes.indiatimes.com/industry/banking/finance/banking/new-yes-bank-ceo-ravneet-gill-is-a-cricket-and-art-fan/articleshow/67673027.cms?from=mdr

¹ ‘European Entities Showing Interest in YES Bank, May Invest $1 Billion’, CBNC-TV 18, 24 December 2019, https://www.cnbctv18.com/finance/european-entities-showing-interest-in-yes-bank-may-invest-1-billion-say-sources-4927421.htm

¹ ‘Who Was Ranbir Kapoor Kissing?’, BollywoodLife, 16 August 2012, https://www.bollywoodlife.com/ndtv/who-was-ranbir-kapoor-kissing-134717/

² Sugata Ghosh, ‘Lens on Mack Star Dealings: Evergreening Allegation Against HDIL and YES Bank’, Economic Times, 2 August 2019, https://economictimes.indiatimes.com/industry/banking/finance/banking/lens-on-mack-star-dealings-evergreening-allegation-against-hdil-and-yes-bank/articleshow/70490836.cms?from=mdr

³ ‘ED Probe Shows How Rana Kapoor Became a Larger Than Life CEO’, Outlook, 12 May 2020, https://www.outlookindia.com/newsscroll/ed-probe-shows-how-rana-kapoor-became-a-larger-than-life-ceo/1831634

Acknowledgements

The story of YES Bank, which I have narrated here, is a combination of first-person accounts, the data analysis of YES Bank’s financials over the year and interviews with people associated with the bank.

There are many people who need to be thanked for this book. My editor at Deccan Herald, Sitaraman Shankar, deserves a lot of gratitude. I was less than four years into my career as a journalist when I started working on the YES Bank story. He supported and encouraged me despite knowing the legal perils we would face. I’d also like to thank my deputy editor, B.S. Arun, who quite literally held my hand as a cub reporter. I remember him editing my copies even on his weekly offs. His support pushed me to pursue bigger stories every day. He remains my first guru in journalism. Many thanks to my reporting manager and business editor, Mahesh Kulkarni. He is a friend and a boss. He has been my advocate for growth in my professional life.

I would also like to thank my then colleagues at office, Nikhil Varma and Samiksha Goel, for bearing the burden of the desk while I researched. I would also like to thank my dear friends at office Pulkit Gupta (Guptaji) and Chaitanya Gudipati (CG), who have been a pillar of strength in tougher times. I would also like to thank my colleagues and management at Deccan Herald for their continuous support.

I’m grateful to former finance minister of India P. Chidambaram for helping me with this book. I remember him readily agreeing to share his perspective as a policymaker. I would also like to thank former RBI governor Dr Raghuram Rajan. His perspective was invaluable.

I would also like to thank my editors, Shreya Punj and Aslesha Kadian, for their work on the book.

Veteran journalists Raghu Mohan and Lekha Rattnani, thank you for helping me with the book. I would also like to thank Vivek Kaul, the author and columnist, for his guidance. I would also like thank my friend and fellow journalist Siddharth Zarabi for helping me with the right contacts. I would also like to thank my friend Syed Tabeer Riyaz, a lawyer who patiently helped me comprehend the legal clauses associated with YES Bank.

I would also like to thank the seventy people whom I interviewed through the course of this book, despite the fact that any activity about the bank was under the radar of the investigating authorities. I am not revealing their identities to respect their privacy.

I would like to thank my best friends Ehtesham Khurshid and Sajid Baksh, who are more like a family to me. They have been pillars of support.

I would like to thank my uncle Riyaz A. Qadri for being the pillar of support right from childhood.

I would also like to thank my brother, Farzan