The Banker Who Crushed His Diamonds: The Yes Ban Story – Furquan Moharkan

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At the New Economy First Annual Banking and Finance Awards at London in the year 2008, India’s YES BANK was awarded the prestigious ‘Most Innovative Bank in India’ honour. Yet, just twelve years later there was placed a moratorium on the bank upon instructions from the Reserve Bank of India (RBI). The RBI superseded the Bank’s Board and appointed as an administrator, Within a day of the moratorium, the RBI had also proposed a reconstruction scheme under which the Indian Banking behemoth State Bank of India (‘SBI”) could take a maximum 49% stake in the restructured capital of the bank.

So how did a bank, which at one point in time was the fourth largest in India plummet to depths of despondency from an imperial pedestal of ascendancy? The answer, or at any rate the primary answer being, Rana Kapoor. The flamboyant co-founder of YES Bank operated in the form of an unfettered tyrant treating a service utility as a personal fiefdom and running it to ground by embracing a set of policies, downright unscrupulous.

Deccan Herald’s business correspondent, Furquan Moharkan, in his newly released book, “The Banker Who Crushed His Diamonds”, tries to blow open the lid on the Rana Kapoor saga that brought a veritable bank down to its knees. Laced with interesting anecdotes and intriguing corroborations, Rana Kapoor’s escapades are both sordid and stunning. Living life to the hilt in a gaudy manner, Kapoor was given to flaunting wealth and power. As Moharkan illustrates the banker splurged Rs 1280 crore for an apartment block that sat on approximately 14,000 square feet, right next to Mukesh Ambani’s home Antilia. Rana was also bestowed with the moniker of “lender of the last resort.” Usually the sole prerogative of the RBI, this title provided ample testimony to YES Bank’s suspect lending practices with Rana at the helm. Charging a hefty upfront fee, which could be shown as ‘profits’ to boost the bank’s books, Rana had a chequered history of lending to failed and failing entities such as Reliance Anil Dhirubhai Ambani Group, Essel Group, DHFL, Jet Airways, Cox & Kings, CG Power, among others.

YES Bank was incorporated by Rana Kapoor along with Harkirat Singh, formerly of Deutsche Bank and the banker responsible for Deutsche Bank’s first foray into venture capital with an investment in India’s first venture capital company, Indus Venture Capital India Private Limited, and Kapoor’s own brother-in-law, Ashok Kapur a former banker with stints at ABN Amro Bank and ANZ Grindlays Bank. Rana soon installed himself at the highest seat of power in the bank by unceremoniously ousting Harkirat and running roughshod over his brother in law. Ashok Kapur was tragically felled by a hail of terrorist bullets in the ghastly Mumbai terror attacks of 2008. In early 2003, Harkirat, set off to Mauritius for a family vacation. “Back in India, Rana thought of doing the unthinkable. He convinced Rabobank to place bets on him as managing director (MD) and CEO, and Ashok Kapur as the CEO. Till then, Harkirat was completely unaware of the decision. He came to know when he returned to India after a week. How were they able to pull it off? Apparently, Rana had bribed one of the senior Rabobank officials in India. ‘He had bribed a senior Rabobank guy with £1 million,’ one person, who was part of the redressal process between the three parties and knew the situation inside out, told me while I was writing this book”, informs Moharkan.

Rana was driven not only in his ambitions but also ultra-aggressive in his practices as well. Not only was Rana good at collection, he would also go to any extent to get the job done. “Once at YES Bank, he was not getting repayments from one of his small-and medium-scale enterprise borrowers. The client was out of the country. When he returned, Rana sent a car to receive him at the airport. From the airport, the borrower was directly driven to Rana’s cabin on the ninth floor of Nehru Centre. There, Rana, according to a former YES Bank employee present in that meeting, using Hindi cuss words told him: ‘Tune mera paisa liya hai. Tu lautaayega kya yeh paisa, warna tujhe uthaaunga (You have borrowed my money. If you don’t return it, I will get you kidnapped).”

Kapoor’s business model was encapsulated in a phenomenal piece carried by the Economic Times, post the collapse of YES Bank. According to the article, when a promoter of a mid-sized shipping company desperately wanted  Rs 3.5 billion and no bankers entertained him, Kapoor offered him a whopping Rs 5 billion over a period of 12 years. The condition was that the promoter was bound to pay Rs 500 million or 10% of sanctioned loan as an upfront fee.

Kapoor’s shocking banking practices were called out by the global financial services firm UBS in 2015, when it published a negative report about the asset quality of YES Bank’s books. As Moharkan informs, was the regular practice with YES Bank and Kapoor, a complaint was filed against UBS alleging that the findings were biased, motivated and unrealistic.

When the sun finally set on the Kapoor saga, “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.”

However, what could otherwise have been a rousing and riveting book is marred and tarnished by an absolutely unforgivable editorial job (or a complete lack of it). The book is replete with grammatical and spelling errors, not to mention disjointed, and in some cases even incomplete sentences. It is unthinkable that a publisher of the repute of Penguin would totally fail in their basic responsibilities of performing even a rudimentary grammar check on a book before deeming it fit for ultimate publication. The errors riddling the book at times take away the very inclination of the reader to continue ploughing through the mess. The publishers would do well to redress this shockingly shoddy effort before printing the next edition at least.

For example consider this sentence: “Rana was appointed as consul for the Republic of Cyprus since 2002. In 2015, Rana was appointed as the consul general of the Republic of Cyprus, Maharashtra, at a time when a high-level delegation led by the President of Cyprus was planning to visit India in 2016…” Even a fallacy of Geography could not have succeeded in placing Cyprus squarely within the territory of Maharashtra.

Yet another blooper: “On 7 June 2015, he resigned as co-CEO of Deutsche Bank, along with Initially, Anshu was also accused of misleading German Federal Financial Supervisory Authority (BaFin) — a charge on which he was later given a clean chit.”

On the whole, “The Banker Who Crushed His Diamonds” is a book that is both interesting as well as exasperating. Interesting for the content and exasperating for the unbelievable quantum of unimaginable and schoolboy editing errors littering the pages.

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