Was KIIFB Tipped Off About Yes Bank Crisis To Withdraw Rs 250 Crore?
A probe has been initiated by the Ministry of Finance against TS Vijayan, the newly-appointed independent director of Kerala Infrastructure Investment Board (KIIFB), for violating LIC pension rules, The Lede has learnt.
Additionally, sources in New Delhi claimed that a possible information leak for KIIFB when Vijayan was Yes Bank director is also being probed.
The KIIFB had Rs 254 crore deposited in Yes Bank and it was withdrawn on 08 August 2019, according to information shared with The Lede.
KIIFB is a Kerala government-owned statutory corporate body formed under the 1999 Act to mobilise funds for infrastructure development from outside the state revenue.
Even though the funds are raised through loans and bonds and they will be repaid through tax collected, a Comptroller Auditor and General (CAG) audit, however, is not permitted.
It was The Lede that reported the exclusive story that KIIFB had parked Rs 250 crore with Yes Bank and withdrew it ‘surprisingly’ without any trigger.
Interestingly, Vijayan was a director at Yes Bank during that time. He was also a member of the ‘Search & Selection Committee’ to find new bosses for Yes Bank during that time. Yes Bank was falling apart then.
In April 2018, the Reserve Bank of India (RBI) had found serious lapses with Yes Bank and its CEO and co-founder Rana Kapoor. Even though Yes Bank wanted to extend Rana’s tenure till 2021, RBI refused permission and Vijayan was placed in the ‘Search & Selection Committee’ to find a replacement for Rana. In January 2019, Ravneet Gill was picked by Vijayan and his team.
Vijayan was posted in Yes Bank as director for five years. However, in March, the RBI disbanded the Yes Bank board in and capped the withdrawal limit by account-holders to Rs 50,000.
“The KIIB withdrew money in August 2019. Who told them that Yes Bank is in trouble? Who told them that Yes Bank would fall? Isn’t there something fishy in this?” L Narayan, a financial investigator, told The Lede.
“Vijayan was a director with the Yes Bank when KIIFB had money there. Vijayan was a director with the Yes Bank when KIIFB withdrew the money. And now, Vijayan is the KIIFB director. Connecting these dots gives us a whole picture,” the financial investigator added.
PG Sunil Kumar, a financial analyst, told The Lede that if the money had not been withdrawn in August, the Kerala government would have all the money.
“Now, we get only insurance for Rs 5 lakh. It means that we may have lost almost all the crores,” Sunil Kumar said.
Although the government had limited withdrawals from Yes Bank accounts to a maximum of Rs 50,000 per month at the time, deposits with Yes Bank are insured for up to Rs 5 lakh by the Deposit Insurance and Credit Guarantee Corporation (DICGC), a wholly-owned subsidiary of the Reserve Bank of India.
Meanwhile, a source in the Insurance Regulatory and Development Authority of India (IRDA) said that the Ministry of Finance’s Department of Financial Services on 19 March 2020, has slapped a show-cause notice on Vijayan for violation of LIC pension rules and staff regulations as a pensioner of LIC of India. Vijayan was the Chairman of LIC between 2006 and 2011.
“R Balasubramanian, Chief Vigilance Officer at Department of Financial Services, has been appointed as the inquiry officer and Umesh Chandra, Under Secretary at Department of Financial Services, has been appointed as presenting officer,” the source said.
Leaving LIC in 2013, Vijayan was appointed as IRDA Chairman. In 2018, he left IRDA and become a director in Yes Bank in December.
According to the IRDA source, Vijayan had violated Section 8 of the regulatory body by joining Yes Bank.
Section 8, states that the chairperson shall not, for two years from the date on which they cease to hold office as such, except with the previous approval of the central government, accept -- (a) any employment either under the Central Government or under any State Government; or (b) any appointment in any company in the insurance sector.
“Retiring from IRDA as a chairman in February 2018, Vijayan joined Yes Bank in December, which is a violation,” the source added.
Vijayan had joined LIC as a direct recruit officer in 1977 and became LIC Chairman in 2006. However, in 2011, he was demoted from Chairman to Managing Director for the ‘procedural lapses’ he made in LIC investments.
Additionally, there were allegations that he is connected to the LIC Housing loan scam. An internal probe found that Vijayan had not made a ‘procedural lapses’ and a CBI probe found that he is not connected to the LIC Housing loan scam.
And in 2013, the parliament appointed him as IRDA Chairman.
The Lede has written to KIIFB, the Ministry of Finance’s Department of Financial Services, and Yes Bank. The Lede also attempted to reach TS Vijayan for his version.
This report will be updated when they respond.