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Nearly a week after the Reserve Bank of India approved Rana Kapoor’s reappointment as the MD and CEO of YES Bank, analysts and investors are still unclear on the central bank’s rationale for adding the words ‘till further notice’ in its approval.
Neither the RBI nor the private sector lender has chosen to further speak on the issue publicly even as questions remain on whether YES Bank will have to begin work on planning a successor to Kapoor.
The bank is understood to be in communication with the RBI on questions over the terms and rationale for Kapoor’s reappointment.
“YES Bank has received the Reserve Bank of India’s approval that Rana Kapoor may continue as the MD and CEO of the bank till further notice from the RBI,” the lender had said on August 30.
Kapoor’s term was scheduled to come to an end on August 31, and shareholders had proposed a three-year term for him from September 1.
Market sources said the bank has taken the approval “very positively” internally as it shows that Kapoor will remain at the helm.
Bank’s performance
A recent report by ICICI Securities has examined the issue based on potential reasons linked to his position as MD and CEO and those linked to the bank’s performance.
“Could the RBI be reexamining certain clauses in the Articles of Association of YES Bank, including those pertaining to MD and CEO not being subject to retirement by rotation or similar clauses included in the judgement of the Mumbai High Court in 2015? If so, both the above documents are amply clear on the non-retiring status, which the RBI may simply be in the process of re-verifying,” the report said. On the issue of YES Bank’s performance, including past issues of divergence, it has said the lender’s overall performance has been impressive both on asset quality or overall profitability.
“The current RBI Governor Urjit Patel was the Deputy Governor in 2015. All current Deputy Governors have come on board in their existing capacities subsequent to 2015. Thus, it could well be that the decision-making authority needs more time to examine the case for extension,” the report further said.
Meanwhile, YES Bank scrip gained 2.93 per cent on Wednesday and closed at ₹343.90 apiece on the BSE. “If one were to go by the recent regulatory approvals and rating agency actions over the past, it is apparent that YES Bank has been on the right side of regulatory and rating agencies,” the ICICI Securities report said.
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