Evergreening allegation against HDIL and Yes Bank

MUMBAI: A foreign investor in the Indian property market has alleged in a complaint to Reserve Bank of India (RBI) that Yes Bank and realty group HDIL have moved funds to evergreen loans.According to the offshore investor Ocean Deity Investment Holdings — an erstwhile arm of DE Shaw and the 78% owner in an Indian joint venture (JV) where HDIL entities hold minority stake — the loans from Yes Bank to the JV were not authorised by the majority shareholder and the money was transferred to bank accounts of other HDIL group companies, almost simultaneously, to repay loans taken by them from Yes Bank, sources aware of the matter told ET.Mack Star Marketing Pvt Ltd is the JV company and owner of a well known commercial property in Mumbai’s Andheri East area.“We have filed a complaint with RBI. We are not in a position to comment on the matter,” said Sumit Saha, authorised representative of Ocean Deity.70490884 Fund Transfers between March ’14 and March ’16Denying the allegations, Sarang Wadhawan, MD of HDIL, said HDIL or its subsidiaries are not aware of any entity named Ocean Deity Investments or its dealings with Mack Star.“We would like to state that Mack Star Marketing had purchased development rights from HDIL through certain investments by DE Shaw Composite Investments (Mauritius) and the transaction was limited to such sale of development rights with HDIL,” said Wadhawan.It is learnt that DE Shaw Composite Investments (Mauritius) was renamed Ocean Deity investment Holdings following a change in the ownership in the Mauritius entity.Fund transfersOcean Deity is understood to have drawn RBI’s attention to a series of fund transfers between March 2014 and March 2016 which showed that soon after Yes Bank disbursed a loan tranche to Mack Star, almost the entire amount was simultaneously transferred to accounts maintained by HDIL group companies with Yes Bank.Sources said that Ocean Deity told RBI that while Rs 140 crore was lent and transferred through such transactions between 2014 and 2016, there was a similar pattern of transaction, involving Rs 60 crore in multiple instalments, in 2011 and 2012.There were cases, the foreign investor alleged, where money moved to the loan escrow account maintained by Privilege Power & Infrastructure Pvt Ltd (an HDIL group company) with Yes Bank, and the current account of Sapphire Land Development (another company linked to HDIL) with the same private lender.Responding to ET’s queries, Wadhawan said that “all transactions related to Mack Star Marketing were conducted by the company itself and HDIL had no relation in any borrowings or debt raised by Mack Star.Mack Star’s relationship with its lenders was conducted by its owners DE Shaw Composite, Wadhawan added. Yes Bank did not respond to ET’s email till the time of going to press. A bank official said the bank would not comment on client specific issues.Ocean Deity has pointed out to RBI that as per the Articles of Association of the JV, the company was barred from borrowing without the approval of the majority shareholder. The offshore investor has alleged that the primary objective was ever-greening of loans to certain HDIL entities and it was orchestrated by Yes Bank.A banker unconnected to the matter said that in all likelihood Yes Bank had done some paper work and maintained records which it could only share with RBI.

from Economic Times https://ift.tt/2SZTBpu