SEBI has directed former Yes Bank CEO Rana Kapoor, who is currently incarcerated, to pay a sum of ₹2.2 crore.

In a significant development, the Securities and Exchange Board of India (Sebi) has issued a notice to former MD and CEO of Yes Bank, Rana Kapoor, asking him to pay ₹2.22 crore in connection with a case of mis-selling the private sector lender’s AT1 bonds. Kapoor, who has been in jail since March 2020 due to his involvement in the DHFL money laundering case, faces the threat of arrest and asset attachment if he fails to comply with the payment within 15 days.

The demand notice was triggered after Kapoor failed to pay a previous penalty imposed by Sebi in September 2022. The ₹2.22 crore demand includes interest and recovery costs. In the absence of timely payment, the market regulator has the authority to seize and sell Kapoor’s movable and immovable properties. Additionally, his bank accounts may be attached, and he may face arrest.

The case revolves around the mis-selling of Yes Bank’s AT1 (Additional Tier-1) bonds to retail investors, with allegations that the bank and certain officials withheld information about the risks involved during the sale in the secondary market. The sale of AT1 bonds began in 2016 and continued until 2019. Sebi’s investigation revealed that Kapoor oversaw the entire operation, putting pressure on the team to increase sales, thereby creating an undue burden on officials.

Furthermore, Sebi found Kapoor responsible for misrepresentation, material facts suppression, manipulation, and mis-selling of AT-1 bonds to individual investors. The former CEO allegedly compelled private wealth management officials to devise a deceitful scheme to offload AT-1 bonds onto unsuspecting Yes Bank customers.

This development adds to the legal challenges faced by Rana Kapoor and underscores the regulatory scrutiny on financial misconduct and mis-selling practices within the banking sector.