Yes Bank stock climbs 3% as government approves foreign investment plan

Shares of Yes Bank gained as much as 3 per cent after the government approved the bank's proposal to increase foreign equity participation of up to 60 per cent of its equity capital through a qualified institutional placement (QIP).

The cabinet committee on economic affairs (CCEA) today gave its approval to the proposal of Yes Bank Limited to increase foreign equity participation up to 60 per cent through a qualified institutional placement (QIP) of its equity shares to eligible non-residents and / or issue of global depository receipts (GDRs) to eligible non-resident investors, as recommended by the Foreign Investment Promotion Board (FIPB).

The approval would result in additional foreign investment in the country amounting to approximately Rs2,650 crore, the CCEA said in a release.

The Yes Bank stock was up 2.85 per cent on the NSE at 3 pm and was up 3.31 per cent on the Nifty.

Meanwhile, Yes Bank today announced the elevation of three of its top executives as wholetime directors amidst a raging controversy over the nomination of the daughter of one of its founders on the bank's board.

Yes Bank has appointed chief financial officer Rajat Monga, corporate finance head Sanjay Palve and retail and business banking head Pralay Mondal as wholetime directors, subject to RBI and shareholder approvals.

The bank said the appointment of the three directors have been made in a bid to build and strengthen the "institutional and professional character" of the bank.

The bank's board, which met yesterday as per an order of the Bombay High Court to consider the nomination of Shagun Kapur Gogia, has decided to appoint the three executives as wholetime directors, the bank stated in a release.

Gogia is the daughter of the late Ashok Kapur, one of the founders of the bank.

In a statement issued yesterday, Yes Bank said  the decision of the board on Gogia's appointment would be conveyed to the Bombay High Court by 1 July as the matter is subjudice.

Gogia, who is the daughter of the late Ashok Kapur, who was killed in the 26/11 terror attack on the city, had sought a board seat in 2009 but the application was rejected as the board feared she may not meet the "fit and proper" criteria set by RBI.

Her mother Madhu Kapur (whose sister is married to Yes Bank promoter Rana Kapoor) who holds a little over 12 per cent stake in the bank, had on 6 June moved the Bombay High Court against the appointment of Diwan Arun Nanda, Ravish Chopra and MR Srinivasan on the bank board and sought a stay on the AGM slated for 8 June.

The court dismissed the plea of Madhu, but had asked the bank board to advance its July 22 meeting to June 27 to consider Gogia's application for a board seat. The HC will hear the case next on 1 July.