Lead Story

What went wrong at Rana Kapoor's Yes Bank

Corporate banking maverick Rana Kapoor issued big cheques quick and easy. Was it wilful swagger or plain oversight?

Gettyimages

If nobody will lend you money, Rana Kapoor certainly will. Many an industrialist has lived for a good part of the last decade or more with this unshakeable belief. 

Five years ago, the promoter of a mid-size shipping company was staring down a barrel of debt. A large private sector bank was after him for repayment and time was running out. The money involved was around Rs.3.5 billion and every bank he turned to was reluctant to help. That was understandable since talk of his company’s liquidation was already doing the rounds. A well-wisher told him that Kapoor, who was the big boss at Yes Bank, would be the person to reach out to. The businessman could not reach the banker despite making many calls but, a couple of days later, Kapoor’s office reached out to him. They wanted a meeting over dinner and the venue was to be the banker’s home at Samudra Mahal, Worli.

Kapoor was known to be a generous host, especially to his corporate guests. In fact, in late 2014, he acquired a building on Altamount Road, one of Mumbai’s best residential addresses, because his apartment seemed too tiny for these meetings. Situated right next to Mukesh Ambani’s Antilia, the banker paid Rs.1.28 billion for an apartment block that sat on third of an acre. The plan was to demolish the structure and build a bungalow.

As that evening with the shipping-company promoter progressed, there was conversation but none about business. It was a couple of hours before Kapoor brought it up with, “You need Rs.3.5 billion, to be repaid over five years”. The businessman would find it hard to believe the offer Kapoor was about to make — he could borrow Rs.5 billion over 12 years. When no banker was willing to touch him with a bargepole, here was generosity that was hard to understand. He protested gently saying he did not need that kind of money but that was shot down. With no option left, he quietly agreed. 

Like most things in life, it came with a caveat. He had to pay Rs.500 million or 10% of the amount sanctioned as an upfront fee. This was not conventional banking but, given his desperation, he said ‘yes’. Kapoor would use the fee income to make his profit and loss account look better. It was tack he had repeatedly used and it was at work again. The evening

unsub

You don’t want to be left behind. Do you?

Our work is exclusively for discerning readers. To read our edgy stories and access our archives, you’ve to subscribe