'Rocked the credibility of India's banking system' SC observes while hearing Rana Kapoor's bail plea

Rana Kapoor

The Supreme Court, while hearing the bail plea of former chairman and managing director of Yes Bank, Rana Kapoor, on July 14, made oral observations stating that the allegations against him have "rocked the credibility of India's banking system."

However, the court deferred the hearing of the case, and it is expected to be taken up in the coming week.

During the hearing, Harish Salve, King's Counsel representing Kapoor, argued that the minimum punishment for the offenses Kapoor has been accused of is three years, while the maximum punishment is seven years. Salve further emphasized that Kapoor has already been in custody for three and a half years without bail. Therefore, Salve urged the court to grant him bail.

The court acknowledged that, under normal circumstances, they would have granted bail. However, they expressed difficulty in doing so due to the significant impact the case has had on the credibility of India's banking system.

The Additional Solicitor General SV Raju, representing the Enforcement Directorate (ED), argued that Kapoor has been accused of receiving kickbacks in exchange for sanctioning loans.

The court deferred the hearing, noting that they require further clarity on the facts of the case.

Kapoor's appeal to the Supreme Court was against a Bombay High Court order from May, which denied him bail in connection with the DHFL money laundering case. The High Court observed that Kapoor was one of the main accused in the case, facing a "serious charge" of laundering public money.

Justice P D Naik, the single bench of the Bombay High Court, stated in its order that Kapoor had misused his official position to gain undue financial benefits for himself, his family members, and associates. The bench highlighted that it cannot ignore Kapoor's role in the crime, as well as the magnitude and seriousness of the offense.

Kapoor had sought bail on the grounds that he had been in custody since March 2020, the trial in the case would take a long time to commence, and his custody was not necessary.

In 2018, Yes Bank allegedly invested Rs 3,700 crore in short-term debentures of DHFL and sanctioned a loan of Rs 750 crore to a subsidiary of DHFL.

Kapoor is alleged to have received kickbacks amounting to Rs 600 crore by extending a loan to DOIT Urban Ventures (India) Pvt Ltd, a company wholly owned by RAB Enterprises, a company owned by Kapoor's wife and daughters.

His first bail application was rejected by the high court in February 2021.

Kapoor filed a second bail application based on the argument that the maximum sentence under the Prevention of Money Laundering Act (PMLA) is seven years, and since Kapoor had already been in custody for three years, he should be granted bail.