The Banker Who Crushed His Diamonds by Furquan Moharkan (read novel full txt) 📕

its chairman. Mehta was at the helm of Punjab National Bank between May 2017 and September 2019, and had helped it recover from the $2 billion fraud by Nirav Modi and Mehul Choksi, in collaboration with some of the employees of the bank. Prashant Kumar, who was appointed as the administrator on 5 March, took charge as the MD and CEO of the bank.

But the story wasn’t over. On 14 March, the bank was set to announce results.

The bank had scheduled a presser for its Q3 results, which were delayed by a month amid its deteriorating financial condition. The presser was slated to happen at 11.45 a.m. but was abruptly cancelled. It was assumed that the bank would just put the filing on the exchanges at any second. Markets got worried, as they started anticipating a hole in bank’s financials during the October–December quarter, bigger than they had initially thought.

The delay was too long. The exchange filings came in at 10.55 p.m., almost twelve hours later. The bank had reported a staggering loss of Rs 18,564 crore in October–December. The loss is the biggest-ever quarterly loss by any bank in India, toppling the Rs 13,417 crore loss by the PNB in 2018 by over Rs 6100 crore. During the quarter, the bank’s gross bad loans surged to an astounding Rs 40,709.2 crore, more than doubling in just three months from Rs 17,134 crore. The gross NPA percentage of the bank stood at an unprecedented 18.87 per cent. The bank’s capital adequacy ratio also took a hit, dropping to a paltry 4.2 per cent, way below the RBI’s stipulated limits and hinting at quick bankruptcy if the central bank didn’t assum control.

Confirming my newsbreak from February, the bank had seen a huge run in the third quarter as its depositor base eroded by Rs 43,764 crore to Rs 1.65 lakh crore. The run on the bank continued into the January–March quarter as the bank has seen its deposit base further erode by Rs 28,200 crore, till the RBI plugged the withdrawals by placing a moratorium.

On 18 March, as the moratorium was lifted, the run on the bank resumed. In just twenty-five days after 5 March, the bank saw its deposit base erode shrink by one-fourth or Rs 32,191 crore, most of which came after the moratorium was lifted and the depositors sought refuge with other banks.

Figure 2:

Source: Company filings

Since the day SBI assumed control of the bank, the deposit base further eroded by a whopping Rs 34,789 crore. The deposit base of the bank, as of May 2020, stood at Rs 1.02 lakh crore, less than half of what it used to be at the end of September 2018 (explained in figure 2 on the previous page). The deposits have been coming steadily since March 2019, leading to a dearth of funds for the bank. The erosion in deposits also takes away the current accounts and saving accounts from the bank.

ED INVESTIGATIONS AND COBWEBS

Much before the fall of YES Bank, an asset manager who had been close to the NDA government, once told me, ‘Rana pakka andar jaayega. Aap dekhte jaaiye, sir (Rana Kapoor will be arrested for sure. You just wait and watch).’ One of Rana Kapoor’s industrialist friends, who I interviewed during the course of the book, said that Rana knew he was going to be arrested by the ED right in January end. ‘He tried adjusting his books by that time and settling the accounts,’ the friend said. This probably explains his trip to London in the middle of January. And the asset manager wasn’t wrong, for Rana Kapoor was arrested on Saturday, 7 March 2020, two days after the fall of YES Bank.

Rana was a man who, till two years ago, thought of himself as invincible. In 2017, at his eldest daughter’s wedding, Union Minister Piyush Goyal and his wife were at the reception, posing with the Kapoor family. Tata Sons chairman N. Chandrasekaran, and Bollywood superstars Shahrukh Khan and Salman Khan were also there. But there was no one around as his deeds (or misdeeds, as the court decides), landed him in jail.

The political pressure was huge: after all, it was the fourth largest private bank that had failed. Had the RBI waited for fifteen more days, the bank would probably have been bankrupt, triggering a situation similar to the global financial crisis in the US during 2008, when global banks were collapsing like a pack of cards. Everyone in the financial industry was baying for Rana Kapoor’s blood. ‘The government will fall if it doesn’t come up with anything concrete, there will be chaos,’ one bank chief told me on 7 March.

Within hours, Rana Kapoor was arrested by the ED. From 5 March till 19 March, the ED tried to establish the flow of money, interrogated Rana Kapoor six times and recorded his statements. Other than Rana, there were seven more statements that were recorded. The first statements to be recorded were of the people associated with DHFL and the Wadhawan family — CA Sonpal Jain and Rajendra Mirashie, the head of project finance at DHFL. On the same day, Rana Kapoor’s eldest daughter, Radha Kapoor Khanna, was interrogated. On 11 March, his youngest daughter, Roshini Kapoor, and YES Bank’s former CEO Ravneet Gill were quizzed. The statements, which have been enlisted in the chargesheet, were recorded till 19 March. A lot surfaced in those rounds of questioning.

Unlike a police statement, where an accused can change his statement in the court, the statements taken by the ED go on record in the court of law. Rana Kapoor was not cooperative in the questioning by the ED. He is allegedly said to have changed his statements multiple times. But why was he not cooperating? Many who watched the developments closely felt that Rana was trying to shield his daughters. ‘He was very careful. It was clear that he was trying to shield his daughter,’ one person who followed the ED