Yes Bank Audit Flags Governance Lapses in ₹500 Crore Loan Sale to Suraksha ARC

A recent internal audit has raised serious questions about a ₹500 crore non-performing asset (NPA) sale by

to Suraksha Asset Reconstruction Company (ARC) in 2017. The loan pertained to Housing Development and Infrastructure Ltd (HDIL). While Yes Bank cited a 15% cash margin in the transaction, auditors suspect that those funds may have originated from loans Yes Bank itself extended to entities linked with Suraksha ARC—casting doubt on the integrity of the deal. Key Concerns Identified: * Weeks before the asset sale, Yes Bank advanced approximately ₹199 crore in credit to Fortune Integrated Assets Service Ltd., a Suraksha-linked firm. In March 2017, the bank increased this facility by another ₹100 crore—funds that auditors believe may have been diverted to finance the NPA purchase. * There was a troubling absence of competitive bidding or independent valuations for the asset sale, deviating from standard ARC disposal norms. * Notably, Suraksha ARC acquired nearly 98% of Yes Bank’s distressed assets during FY17, raising concerns of preferential treatment without transparent processes. * The asset’s value had surged to ₹700 crore by the time of insolvency, but only around ₹150 crore is expected to be recovered—indicating a potential 75% loss. Why It Matters: The findings suggest deep governance and procedural weaknesses that could trigger regulatory scrutiny and potential legal investigation. This case may have broader implications for asset sale practices, especially regarding conflicts of interest and transparency. Yes Bank’s internal control failures could undermine market confidence and prompt tighter oversight. Source: NDTV Profit No Recommendations