Nippon India Mutual Fund under CBI Scanner for Yes Bank Bond Investments
The Nippon India Mutual Fund also called the Reliance Mutual Fund is being investigated by the Central Bureau of Investigation (CBI) for investing in NCDs that were issued by Morgan Credit Private Limited, this account is connected to Rana Kapoor’s family.
This case is similar to an ongoing investigation that involves the Securities Exchange Board of India, SEBI and many other organizations that delve into Rs.2,850 crore transaction transfers made by companies from the Reliance Capital group. These are dominated by the risky AT1 bonds that were issued by Yes Bank.
The Pages that CBI Seeks
On 21st December 2023, the mutual fund was instructed by the CBI to assist the Bureau which in the long run directed the fund to seek questions in regard to the firm’s 950 crore rupees’ investment back in May of 2018 in the non-converted bonds of Morgan Credit Private Limited. Until this period, the House has opted to remain quiet regarding the mutual fund’s notice.
The market regulator, Sebi in August 2023, issued show cause notice to numerous people and firms including the former top officers and officials of the fund even members of the Ambani family concerning suspicion of financial wrongdoing. Other companies include Reliance companies including Reliance Home Finance and Reliance Commercial Finance.
The investigation covers transactions that took place between December 2016 and March 2020. During the said period, Reliance Mutual Fund, while under the ownership of Reliance Capital, invested heavily in Yes Bank’s AT1 bonds and other financial products.
Investigations are on to know if it was a deal in which the Yes Bank provided the much-needed finance to Reliance companies for these investments. SEBI found that Yes Bank had given Rs.500 crore to Reliance Home Finance in January 2017 through cash credit, loans, and NCD investments. Then later in October 2017, Yes Bank gave Rs.2,900 crore to other Reliance Capital companies through the same means.
Ownership Change
The name of the fund house was changed from Reliance Mutual Fund to Nippon India Mutual Fund in September 2019 after a change in ownership. However, the investigations pertain to the period when Reliance Capital owned the company.
In September 2023, Nippon Life India Asset Management, the fund house, confirmed that it had been issued a show-cause notice by SEBI. The investment made by the fund house is in Yes Bank’s AT1 bonds, and even some leaders who worked during the period between 2016 and 2020 with the company are named in the notice.
These investigations have raised serious questions about how financial institutions operate and follow rules. The case shows the need for more transparency in mutual funds and corporate dealings, especially with high-risk investments like AT1 bonds.
The final outcome of this investigation is expected to have a big impact on everyone involved, as authorities continue to uncover details about these financial activities.
