Yes Bank, HDIL Accused of Evergreening Loans: Report

New Delhi: Foreign investor Ocean Deity Investment Holdings, in a complaint to Reserve Bank of India (RBI), has alleged that private sector Yes Bank and realty group Housing Development and Infrastructure Limited (HDIL) have moved funds to evergreen their loans, The Economic Times reported.

The complainant company -- an erstwhile arm of DE Shaw and the 78% owner in an Indian joint venture (JV) Mack Star Marketing Pvt Ltd, where HDIL entities hold minority stake alleged that the loans from Yes Bank to the JV were not authorised by the majority shareholder. Citing sources aware of the matter, the report says that the money was transferred to bank accounts of other HDIL group companies, almost simultaneously, to repay loans taken by them from Yes Bank.

According to the report, in its complaint to the RBI, Ocean Deity claimed that between 2014 to 2016, amount worth Rs 140 crore lent by Yes Bank to Mack Star was transferred through suspicious transactions to HDIL entities and similar such transactions involving Rs 60 crore during 2011 and 2012.

“We have filed a complaint with RBI. We are not in a position to comment on the matter,” the report quoted Sumit Saha, an authorised representative of Ocean Deity, as saying.

The report adds that the Ocean Deity has pointed out to the RBI that “as per the Articles of Association of the JV, the company was barred from borrowing without the approval of the majority shareholder.” “It is learnt that was renamed Ocean Deity investment Holdings following a change in the ownership in the Mauritius entity.”

Sarang Wadhawan, managing director of HDIL, however, denied the allegations. “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,” The Economic Times quoted him.