Nirav Modi used 13 companies in UAE to round trip millions: Prosecution in UK
Indian fugitive diamantaire Nirav Modi used 13 companies in the UAE and six in Hong Kong for the purpose of round tripping money, the prosecution told a London court on the first day of the five-day trial on his extradition.
 
The jeweller, who was arrested by Scotland Yard in the UK in March 2019 on an extradition warrant by India over charges of fraud and money laundering, attended the court using a videolink from his prison in Wandsworth, London. He has been denied bail five times so far. The businessman has also applied for political asylum in the UK, sources in London told IANS.
 
Indian investigative agencies Central Bureau of Investigation (CBI) and Enforcement Directorate (ED), seeking Nirav Modi's extradition are being represented by the Crown Prosecution Service (CPS) in the UK.
 
The CPS, represented by Barrister Helen Malcolm, told the court that Nirav Modi in connivance with some of the PNB officials, embezzled around $2 billion and bribed PNB bank official Gokulnath Shetty. She told the court that Nirav had also threatened to kill a witness if he gave any statements against him.
 
Explaining the modus operandi of the fraud, Malcolm told the court that on the pretext of buying material at a cheaper rate, like pearls for example, Nirav Modi borrowed from local banks in India.
 
"The bank guarantees required to get loans in the form of MOU's were signed off by corrupt bank officers of the PNB and the money secured in this manner was used to pay an earlier loan instead of buying raw material," she said.
 
"Each borrowing was paid off later by greater borrowing," Malcolm said adding that this is how Nirav Modi had built his empire on a "ponzi scheme".
 
Malcolm also told the court that after his extradition, Nirav would be lodged in barrack 12 of Arthur Road Jail in Mumbai, Maharashtra.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
  • Like this story? Get our top stories by email.

    User 

    ED probe shows how Rana Kapoor became a larger than life CEO
    Investigations by the Enforcement Directorate into the business dealings of former Yes Bank CEO, Rana Kapoor and family has brought to light a web of questionable transactions hinging on hundreds of bank accounts, investment companies.
     
    The ED investigations show that the family held as many as 168 bank accounts and 101 investment companies which led to Kapoor starting as a professional banker and becoming one of India's most high profile promoters with a lavish lifestyle. Kapoor is in jail facing multiple charges of financial wrongdoing.
     
    Fond of a flamboyant lifestyle, Kapoor was a tenant of a palatial duplex owned by BJP leader Jyodiraditya Scindia in the Samudra Mahal complex in Worli in Mumbai. This was the address where parties were thrown by Kapoor regularly.
     
    Kapoor and family had as many as 101 investments configured through three holding firms -- Morgan Credits (MCPL), Yes Capital India (YCPL) and RAB Enterprises, according to the ED.
     
    Rana Kapoor, wife Bindu and their daughters Roshni, Radha and Rakhee Kapoor held a total of 168 bank accounts in different banks.
     
    The family holding companies invested across 15 mutual funds and owned a collection of 59 paintings worth Rs 4 crore. There was a separate room at Samudra Mahal to keep these paintings. Among others, the paintings include a portrait of the late Rajiv Gandhi by celebrated artist M.F. Hussain.
     
    According to ED investigations, the Kapoor family first began these investment companies from 1991. That was the year MCPL was formed.
     
    YCPL, previously named DoIT Capital, was incorporated in May 2003. Later that year—Yes Bank was formed in 2004 -- both these companies were approved by Reserve Bank of India (RBI) as investment companies.
     
    The main source of investment in Yes Bank was the funds Kapoor received from the sale of shares to Rabo Bank Holland in the joint venture company, Rabo India Finance.
     
    In 2002-03, Rana Kapoor and partners Ashok Kapur and Harkirat Singh exited selling the stake to Rabo Bank. In 2004, Kapur and Kapoor launched Yes Bank.
     
    The investigative agencies are also probing the transactions between Kappor family and the Wadhawans of DHFL.
     
    DHFL is facing insolvency proceedings and owes creditors around Rs 36,000 crore.
     
    The Central Bureau of Investigation (CBI) has said investigations by its economic offence wing into alleged deals worth Rs 5,050 crore found the Kapoor family received kickbacks in exchange for giving Yes Bank loans to the Wadhawans of DHFL through various channels and in gross violation of rules.
     
    Kapoor is said to have used investment companies to get undue benefits from the Wadhawans after influencing Yes Bank to extend large loans to DHFL and other Wadhawan companies by flouting rules, according to the CBI.
     
    According to ED officials, in April 2018, Yes Bank gave a loan of Rs 3,700 crore in short-term debentures to Wadhawan's DHFL. This money has not come back to Yes Bank yet.
     
    Yes Bank also sanctioned a loan of Rs 750 crore to one of the companies, Belief Realty (BRPL), owned by DHFL promoters Kapil Wadhawan and Dheeraj Wadhawan and their family members.
     
    This funding is said to have been siphoned off by Kapil Wadhawan and Dheeraj Wadhawan through their shell companies.
     
    The entire amount was transferred to DHFL without making any investment in Bandra Reclamation Project for which the loan had been originally sanctioned, according to ED officials.
     
    A red flag had been raised by the loan risk team of Yes Bank which had pointed out multiple and serious issues in the proposal. This included the fact that a majority of the project approvals were not in place. Also, the Letter of Intent (Lol) issued by SRA was for a carpet area of 1.3 lakh square feet whereas the proposal from BRPL had considered an area of 6.3 lakh square feet.
     
    Even after these warnings, the formal approval was given, no external rating o due diligence was called for on the BRPL. Immediately after disbursement of loan, the internal rating of the transaction was downgraded.
     
    The standard process stipulated by the Yes Bank's risk management processes for valuation was waived and no end-use certificate was called for from BRPL. The loan was sanctioned at the insistence of Kapoor, officials have alleged.
     
    "All along, Rana Kapoor knew that the Rs 750 crore sanctioned to Belief Realtors for its Bandra reclamation project was not going to be used for the declared purpose," the ED has alleged.
     
    The investigators said this deal was to siphon off the money from Yes Bank. The Rs 750 crore was sanctioned to the Wadhawan company without a penny being spent for the stated use.
     
    The other allegation is that the Wadhawans paid a kickback of Rs 600 crore to Rana Kapoor and family under the guise of loan of the same loan from DHFL, according to the ED.
     
    This was given by DHFL to DoIT Urban Ventures, one of the investment companies owned by the family of Rana Kapoor. Kapoor's daughters are 100 percent shareholders in DoIT through MCPL.
     
    The Rs 600-crore loan was given by DHFL to DoIT on the basis of mortgage of sub-standard properties including 7.79 acres of land at Alibaug and 91.63 acres at Raigad. These land parcels has low value and loan was valuated considering its future conversion from agriculture land to residential land. Besides, Radha Kapoor gave a personal guarantee showing a net worth of Rs 1,386 crore, according to ED documents.
     
    Of the Rs 600 crore, DoIT used Rs 300 crore for repayment of an earlier loan. The remaining, the company said, is for general corporate purpose.
     
    Against this loan, five properties were given as collateral to DHFL. At the Wadhawans' instruction, DHFL valued these properties at future value on becoming commercial land.
     
    At the time of giving loan, the purchase value of this land was only Rs 39.66 crore while the valuation done by DHFL was Rs 735 crore. This plot remains an agricultural land, according to ED documents.
     
    The ED investigation said Rajendra Mirashie, president (project finance) of DHFL did not interact at all with the three daughters of Kapoor, the owners of DUVPL. Marishie used to coordinate with Lata Dave, senior executive secretary of Rana Kapoor. Kapoor often talked to the Wadhawans directly and sometimes, with S Govindan, their executive assistant.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
  • Like this story? Get our top stories by email.

    User 

    NBFCs Could Face More Challenges in Funding if COVID-19 Situation Prolongs: Report
    Over the past year, non-banking finance companies (NBFCs) have continued to face liquidity concerns. If the coronavirus (COVID-19) situation prolongs, leading to extension of lockdowns, challenges for the sector could mount substantially, says a research note.
     
    According to the report by CARE Ratings, borrowing profile of NBFCs has changed significantly from capital market instruments to bank borrowings. Additionally, debt issuance in primary market shows that the share of financial services has come down since March 2019, while it has increased for the other segments indicating shift in the borrowing pattern with corporates shifting to debt market. However, with the outbreak of Covid-19 the challenges have increased further, this time in the form of asset quality.
     
    The ratings agency says, "Amidst these increased issues, the funding challenges could mount again, as banks become more selective in extending credit. Also, mutual funds (MFs) are expected to shy away from lending to the sector as they witness redemption pressures. The increase in risk aversion of investors has also led to reduction in allocations by MFs, resulting in lowered issuance of commercial papers. Further, securitization, which has been one of the major sources of funding for NBFCs during the last 18 months, could take a pause as collections remain uncertain during moratorium. The scenario of collections seems weak at this stage, though the extent of collections would differ from company to company."
     
    "Funding has been made available by Reserve Bank of India (RBI) to provide special refinance facilities of Rs50,000 crore to National Bank for Agriculture & Rural Development (NABARD), Small Industries Development Bank of India (SIDBI) and National Housing Bank (NHB) for on-lending to NBFCs. However, some measures announced by RBI like the targeted long-term repo operations 2.0 (TLTRO 2.0) have been partially successful as the banks choose to bid half the amount put by the RBI," it added.
     
    Post-September 2018, the NBFCs went through a period of tight liquidity which restricted their funding avenues and increased their cost of borrowing. The sector had to respond through slowing down disbursements, reducing capital market borrowing, correcting asset and liability management (ALM) profiles and building up liquidity buffers. As the sector was slowly beginning to emerge out of that crisis, it is now starring at the unprecedented COVID-19 situation.
     
    "It is interesting to witness the shift of NBFCs borrowings from capital market instruments to banks after September 2018. The following table shows that NBFC borrowings from MFs are declining, while banks outstanding advances to NBFCs are increasing. The overall funding available to NBFCs has been increasing despite declining funding from MFs," CARE Ratings says.
     
     
    According to the ratings agency, the (COVID-19) outbreak has come at a time when NBFCs have witnessed improvement in liquidity buffers as companies reduced their short-term borrowings (including commercial paper) and have shifted to bank borrowings.
     
    Banks’ lending to NBFCs registered a growth of 47.7% during September 2018 to March 2020. In the current situation, where NBFCs are struggling to raise funds from capital market due to higher cost and lack of availability of funds, there has been a shift to bank borrowings from market borrowing, the ratings agency says. 
     
     
    The overall composition of NBFCs in bank credit increased from 6.2% in July 2018 to 7.4% in March 2019 and further to 8.8% in March 2020.
     
    The proportionate share of debt-oriented scheme is 31.7% of industry assets in March 2020, up from March 2019 levels as the share of equity-oriented schemes decreased from 42.5% in March 2019 to 39.7% in March 2020 due to reduction in value because of sharp fall in equity market, the report says.
     
     
    As per CARE Ratings, investments in CPs of NBFCs are on a consistent monthly decline. After the liquidity crisis triggered in the NBFC space, MFs (mutual funds) withdrew over 50% of their investments from this category. The percentage share of funds deployed by MFs in CPs of NBFCs in March 2020 fell to 3.3% of debt AUMs, lowest since July 2018 when it was 11.3%, and the amount held declined to just Rs.0.44 lakh crore. The decline in investments in corporate debt paper of NBFCs at Rs.0.94 lakh crore in March 2020 was lower. The percentage share declined to 7.2% compared with 7.7% in July 2018, it added.
     
     
    Amid severe liquidity crunch and the aftermath of NBFC crisis, NBFCs had limited funding access to primary market and hence banks became the major source of their financing needs. As can be seen in below chart, total monthly funds raised by NBFCs from primary market stood at Rs0.3 lakh crore in March 2020 as compared with Rs0.8 lakh crore in March 2019.
     
     
    To mitigate the burden of debt brought about by disruptions due to Covid-19 pandemic the RBI announced certain regulatory measures. The RBI announced three months moratorium to borrowers of both banks as well as NBFCs. All NBFCs have extended the option of giving moratorium to their borrowers restricting to those who would like to avail this facility. 
     
    There was some lack of clarity on whether NBFCs can avail moratorium on their borrowings from bank. However, after an extended meeting of top banks and NBFCs with RBI governor on 4 May 2020, banks have agreed to extend moratorium to their NBFC and housing finance company (HFC) clients selectively on case-by-case basis.
  • Like this story? Get our top stories by email.

    User 

    We are listening!

    Solve the equation and enter in the Captcha field.
      Loading...
    Close

    To continue


    Please
    Sign Up or Sign In
    with

    Email
    Close

    To continue


    Please
    Sign Up or Sign In
    with

    Email

    BUY NOW

    online financial advisory
    Pathbreakers
    Pathbreakers 1 & Pathbreakers 2 contain deep insights, unknown facts and captivating events in the life of 51 top achievers, in their own words.
    online financia advisory
    The Scam
    24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
    Moneylife Online Magazine
    Fiercely independent and pro-consumer information on personal finance
    financial magazines online
    Stockletters in 3 Flavours
    Outstanding research that beats mutual funds year after year
    financial magazines in india
    MAS: Complete Online Financial Advisory
    (Includes Moneylife Online Magazine)