‘No real clue’ — What Rana Kapoor told me when I asked him why Yes Bank failed

In ‘Yes Man’, Pavan C. Lall traces the rise and fall of Rana Kapoor, and how one of the largest private banks in India ran out of cash.

File photo of Yes Bank branch in Mumbai | Photo: Dhiraj Singh | Bloomberg

I exited Yes Bank on 31 Jan 2019, so no real clue,’ read Rana Kapoor’s prompt but terse response at 3.34 p.m. on 6 March 2020, when I asked him if he could explain what had happened to Yes Bank for it to get to where it had. Just a day earlier, the government had placed what Kapoor had frequently referred to as his ‘baby’ under moratorium until 3 April 2020, and put a limit on withdrawals per account as well as instructed its board to get out of the driver’s seat. 

For the second time in recent memory, TV channels and newspapers went berserk flashing headlines on how a celebrated entrepreneur had gamed the system to make off with billions, mismanaged affairs to the point where people couldn’t access their own money. 

It was something that I experienced first-hand, as an account holder with the bank myself. When I went to the Mumbai branch where I had opened my account the queue that extended close to fifty metres outside it along the side of the pavement was all one had to see to realize something was wrong.

Several persistent calls to my relationship manager led me into the bank one hour later, where tense employees were scurrying around trying to answer questions they had no answer to while customers complained and waited their turn to receive the amount of cash they were allowed to withdraw. 

One manager, in tears, was apologizing profusely to a senior customer in his seventies who said he needed more funds to pay for his wife’s cancer treatment. I didn’t stay long enough to see how he was going to be taken care of or if he had his medical documents to get more than the prescribed limit of his own money that he had put in a bank for his retirement years. 

In the financial world outside, and at large, as all eyes turned towards Kapoor for answers, the events that were to unfold would move like a tightly-stitched crime story playing out in real life. Even as Kapoor made no move to flee, admit guilt or feign ignorance, he had already been encircled. Government agencies lost no time in raiding Kapoor’s Samudra Mahal apartment on a Friday night and grilling him for over twenty hours before he was hauled off for questioning by the ED, produced in front of a Mumbai court and then held in custody. The man whose managers would say he could never be wrong had run out of luck. Nothing he could say would sound right anymore. 

Almost simultaneously, Kapoor’s younger daughter Roshini was stopped by officials at Mumbai’s international airport, attempting to fly overseas to London on a British Airways flight. 

Speculation would hint at her travel plans being predicated by a mission to shore up and consolidate the financial assets Kapoor might have moved abroad in the past. The central bank may have had its slip ups but there was no getting past the long arm of the law once it swung into motion, and from the looks of it, the Kapoors wouldn’t have a chance of beating the system. If there was one decision that he would have rued above all, it would have been that he left England to come back to India. There, too, lay multiple conspiracy theories. 

One suggested that Kapoor had cut a deal with the government and the central bank to come back and take the fall for the misdoings at the bank as long as his daughters and family were left out of the courtroom proceedings.

Another suggested that he was lured back with vague and hazy offers that ranged from becoming the new finance minister to taking charge of Yes Bank once again because Gill wasn’t able to fix the downhill slide. A third story would suggest that he had gone to get medical treatment in London and came back of his own accord. None of the above could either be established, rejected or verified. 

It was also the first time in twenty years that a private lender had run out of money and allegations of money laundering, kick- backs and white-collar crime had surfaced against the promoter shareholder who started the bank. How had it happened? 

If the allegations were accurate, Kapoor was guilty of gross mismanagement of other people’s money with criminal irresponsibility stamped all over his actions, tacitly endorsed by the board and its senior managers. 

This excerpt from ‘Yes Man: The Untold Story of Rana Kapoor’ by Pavan C. Lall has been published with permission from HarperCollins India.