Yes bank board to seek more time for Rana Kapoor as MD & CEO
26 September 2018
The board of Yes Bank on Tuesday decided to request the Reserve Bank of India (RBI) to grant more time to its managing director and chief executive officer Rana Kapoor till it finds a suitable replacement.
The board in a filing to BSE said it needs more time to find a successor for Rana Kapoor and three months is not enough.
The board has also decided to form a search and selection committee to identify a new MD and CEO for the bank, after the RBI asked Yes Bank founder Rana Kapoor to step down from the post of CEO and MD by end-January 2019.
The committee would consist of three existing members of the nominations and remuneration committee of the board as well as two external experts.
In the interim, the board said that in order to establish a long term succession plan within Yes Bank, it has been decided to appoint Rajat Monga and Pralay Mondal, currently senior group presidents, as executive directors of the bank. Appropriate recommendations would be made to the banking regulator, the board said.
Kapoor’s current term ends in September. In June, the bank had approved another three year term but required RBI’s approval for the same. The regulator has asked Kapoor to continue till further notice
"It was decided that Reserve Bank of India be requested for an extension up to minimum April 30, 2019 for finalisation of audited financial statements for fiscal year ending 2019; thereafter subject to RBI approval, up to September 30, 2019 in order for the statutory AGM process to be completed," the bank in a statement.
Last week, the RBI in a letter had asked the Yes Bank founder Rana Kapoor to step down from the post of CEO and MD by end-January. The board had earlier approved a three-year term for Kapoor, starting September 2018.
Kapoor, along with being the managing director and chief executive, serves as the whole-time director of the bank.
While Yes Bank reported rapid growth over the last decade under Kapoor, the regulator pointed out discrepancies in the way the bank reported its bad loans. The bank had higher bad loan ratios for two consecutive years.
Kapoor’s is the second instance of RBI stalling a reappointment in a private lender after Shikha Sharma, managing director and chief executive officer of Axis Bank Ltd, was not allowed a term extension.
RBI asked the bank board to reconsider its approval prompting Sharma’s exit. She will step down on 31 December, following which, Amitabh Chaudhry of HDFC Standard Life Insurance Company Ltd. is set to take over.
Rana Kapoor, founded Yes Bank in 2003 with his brother-in-law Ashok Kapur and colleague Harkirat Singh, becoming the first to get a banking licence under RBI’s policy of allowing more private sector banks.
Rana Kapoor, Ashok Kapur and Harkirat Singh had together set up Rabo India Finance, the India arm of Netherlands-based lender Rabobank. Later all three partners sold their cumulative 25 per cent stake in the India arm to set up Yes Bank with a Rs200 crore capital.
While Harkirat Singh left the outfit due to differences among the major shareholders on who would lead the bank, Ashok Kapur tragically passed away during the Mumbai terror attack in November 2008. Since then, Kapoor has been the sole founder director to lead the bank.
Rana Kapoor also successfully fought off a challenge by his sister and Ashok Kapur’s wife Madhu Kapur who dragged him and the Yes Bank board to court in 2013, seeking more powers in nominating new board members. Since Kapoo’s promoter shareholding had been passed on to his family after his death, his wife initially sought to appoint their daughter Shagun Gogia on the bank’s board.
Kapoor and the bank’s board opposed this appointment citing lack of experience. The bank also contested that the Kapur family’s shareholding had moved to non-promoter status after the co-founder’s death.
The Kapur family later demanded that they have say in appointing new directors on the bank’s board. In 2015, the Bombay High Court ruled in favour of Kapur and Gogia, giving them powers to jointly nominate new members.