CBI case against Avantha boss over Rs 466 crore loan fraud

The Central Bureau of Investigation has registered a case against Gautam Thapar, the promoter of Avantha Group for a loan fraud involving 466 crore rupees from the troubled Yes Bank.

New Delhi: The Central Bureau of Investigation has registered a case against Gautam Thapar, the promoter of Avantha Group for a loan fraud involving 466 crore rupees from the troubled Yes Bank.

According to the CBI, Oyster Buildwell Pvt Ltd, OBPL, a subsidiary of Avantha Group acquired the loan to fund its power projects. An audit has revealed the loan was diverted to repay the loans of Avantha Group, the investigator said. The probe came after the company started defaulting on the loan.

'The account has been reported as fraud to the Reserve Bank of India (RBI) on February 9, 2021, with an amount of Rs 466.51 crore… on the grounds of misrepresentation of the purpose of funding and eventual diversion of loan funds by the borrower to repay the loans of other group entities, in collusion with other group companies,' the complaint by Yes Bank’s vigilance department to the CBI said. The CBI's FIR on June 2 also named Raghubir Kumar Sharma, Rajendra Kumar Mangal and Tapasi Mahajan – all directors in OBPL.

Crisis-hit Yes Bank

Yes Bank was one of the busiest banks in the country after it was launched in 2004. First signs of trouble hit the bank in 2015 when UBS, a global financial services company, raised doubts about its asset quality.

According to reports, UBS said Yes Bank loaned more than its net worth to companies that were unlikely to repay. But the bank continued to extend loans and became the fifth-largest lender in the private sector. As more light fell on the bank's activities, analysts could see the bank was lending to sectors that were struggling in the past few years - such as - non-banking financial companies, real estate and construction firms. As a result, the bank's non-performing assets or NPA started to rise steadily.

According to reports, The Reserve Bank of India or RBI warned the bank for underreporting its NPAs. The crisis deepened with debtors failing to pay back and the loss of public confidence in the bank. Reports suggested up to Rs 18,000 crores were withdrawn by depositors between April and September in 2019.

On March 5, 2020, the RBI imposed a moratorium on Yes Bank, which limited withdrawals to Rs 50,000 among other curbs. A few days later that year, investigators arrested the bank's 63-year-old co-promoter Rana Kapoor over kickbacks paid to him and members of his family for loans provided to a number of high-profile borrowers.

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