A Rigged System: Rana Kapoor Wasn’t Alone in the Yes Bank Crisis

Furquan Moharkan’s book, ‘The Banker Who Crushed His Diamonds’, builds on Rana Kapoor’s life & the fall of Yes Bank.

4 min read

“Rana Kapoor has come across as an over-ambitious man from day one and he somehow had a knack of managing the media and the government,” said author Furquan Moharkan speaking about the founder and former CEO of Yes Bank, which saw one of its worst financial crisis in 2020.

The crisis that Yes Bank went through in 2020 brought to the fore the flaws of the banking system in India, the shortcomings of the Reserve Bank of India (RBI), and most importantly, the lack of preparedness of the system to tackle with such crisis.

Moharkan’s latest book – 'The Banker Who Crushed His Diamonds’ – builds on the life of Rana Kapoor and the fall of Yes Bank.


“There is a saying that power corrupts, absolute power absolutely corrupts. After his brother-in-law passed away in the unfortunate 26/11 terror attacks, we saw Rana Kapoor grabbing absolute power at Yes Bank. And that is where the story started. He slowly started building his empire. After that, it was Rana's Yes Bank. Blaming him alone for this crisis is not the right thing. There were accomplices...  What were the regulators doing?” he said.

‘Whatever Rana Kapoor Did, He Did It for His Family’

Speaking of Kapoor’s family’s involvement, Moharkan said that his family told the Enforcement Directorate where the capital in their company’s accounts was coming from.

“According to the details that have come out, whatever assets Rana Kapoor had, they were not just in his name. They were also in the names of his wife and three daughters. If you see the ED charge sheet, his daughters have said that they had no idea where the capital in their companies came from. And if they knew, it would make them equally guilty. Whatever he did, he did it for his family, to secure the future of his family,” he said.

‘RBI Has a Lot to Answer for’

Commenting on RBI’s role in the matter, Moharkan said that RBI did not act on time despite being aware of the possible failure that Yes Bank was heading towards.

“Six months before the collapse (of Yes Bank), I knew that a collapse is just a matter of time. At that time, the run-out of the bank had not started. People were not withdrawing. The withdrawal started only after October 2019. So, I did a story on 20 September 2019. I knew that no money is coming and whatever they are going around town telling people was a facade,” Moharkan said.

“If me being a reporter based out of Bengaluru – I mean, I'm not sitting at Dalal Street or the Ministry – knew what was happening. It is beyond my imagination that the RBI as a regulator did not know what was happening,” he added.


‘Stakeholders Played Along, Created a Facade of Stability’

Moharkan said that when the Yes Bank crisis is discussed, Kapoor should not be the only person blamed for its downfall when the entire system was rigged.

“When we talk about the system being rigged, when you talk about brokerages, when the bank is failing, their target prices have to come down. Brokerages have to mention them in their research reports. If you observe the last few months – before the collapse of Yes Bank – all brokerages stopped giving target prices for Yes Bank. They were certainly playing along,” he said.

“Again, if you talk about journalists, so many stories came in from here and there but nobody thought what the rationale behind these guys investing (in Yes Bank) was. The names that were initially floating around  (of investors) were not of the companies that invest in distressed assets, which Yes Bank was at that point of time,” Moharkan said.


‘Both Previous and Current Govts Equally Responsible’

When asked about the role of the political dispensation in the matter and the blame game that the Bharatiya Janata Party (BJP) and the Congress resorted to when the crisis came to the fore, Moharkan argued that the responsibility lies on both governments equally.

“The irrational loan growth started after 2014. We had a policy where the RBI had very high interest rates in 2014, because of inflation and various other reasons. There was a wild goose chase in the economy till 2014. So, the RBI started easing the interest rates after 2014 and that is when Yes Bank started lending recklessly. If you see the loan book, it started growing recklessly after 2014,” he said.

“I am not saying that the previous dispensation would have been a saint in case of Rana Kapoor or when dealing with Rana Kapoor. But it has to be equally blamed on both dispensations. Secondly, what was the government doing at the end of it all? The government knew it would be a systemic risk if Yes Bank fails and yet, till 5 March 2020, Yes Bank was at a brink of collapse. The government did nothing,” Moharkan said.

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