Money & Banking

Rana Kapoor leaves Yes Bank, Ajai Kumar interim CEO

Our Bureau Mumbai | Updated on January 31, 2019 Published on January 31, 2019

Rana Kapoor. File photo

The RBI had, in September 2018, asked him to leave office by January 31

The RBI has approved the appointment of Ajai Kumar as interim Managing Director and CEO of private sector lender YES Bank, which is undergoing a transition in its top leadership. “RBI has ...approved the appointment of Ajai Kumar as Interim MD and CEO of the bank from February 1, 2019, for one month or till Ravneet Gill assumes office as MD and CEO, whichever is earlier,” the lender said on Thursday.

The term of the bank’s founder MD and CEO Rana Kapoor term came to an end on Thursday when he demitted office.

Gill, who has been appointed as the new MD and CEO, will, however, take over in March. YES Bank scrip fell 2.56 per cent, and closed at ₹194.30 apiece on the BSE.

PTI adds: The Reserve Bank of India (RBI) had last September asked Rana Kapoor to leave office by January 31 following which the board unsuccessfully sought an extension till September 2010.

The aggressive and temperamental Kapoor, who has had stints with foreign lenders earlier, had launched the bank along with his co-brother the late Ashok Kapur in the early years of the century.

Kapur was killed in the 26/11 terror attack at the Trident Hotel and there was a bitter feud between Kapoor and Kapur’s heirs which played out in the courts.

The two warring groups of promoters who collectively own around 20 per cent of the bank, however, reached a truce Tuesday by agreeing to appoint one non-independent director each on the board.

But the feud with the co-promoter and the RBI action on him had the bank stock, which was one of the premium buy for long, getting whacked since last September, having lost more than two-thirds of its value since then.

Even on a day the benchmark Sensex rallied close to 2 per cent, Yes Bank stock was one of the few to lose, shedding 2.6 per cent to ₹194.30 on the Bombay Stock Exchange (BSE), down almost 55 percent from its 52-week high of ₹404.

Kapoor is credited with building the bank by deftly deploying wads of money in sponsorships and advertisements which served the bank well in getting marquee investors to buy into the bank, along with modern banking practices.

Though the RBI offered no official reasons for shortening his term, it has been attributed to the regulatory audit finding out that the bank under-reporting NPAs by a cumulative Rs 10,000 crore for two consecutive years.

According to sources, the RBI had cited “serious lapses” in governance and a “poor compliance culture” at Yes Bank as reasons for its “regulatory discomfort” in allowing Kapoor to continue to head the lender.

The bank has displayed “highly irregular” credit management practices, the regulator had said.

Sources citing the RBI letter said the regulator also wrote about its “concern” relating to a steep hike in Kapoor’s remuneration by the board while seeking a three-year reappointment, saying it was in defiance of its earlier direction to trim Chief Executive Officer (CEO) bonuses if asset quality was not good.

The central bank said these happenings reinforce its “Grave concerns and regulatory discomfort with the role of Kapoor in the governance, management and superintendence of Yes Bank,” sources said.

The incoming CEO Gill currently heads the German lender Deutsche Bank India. According to an earlier statement by Yes Bank, he will take charge on or before March 1.

In a statement, the bank said Kumar had been a senior strategic advisor since 2014 and has been serving on the board since 2016.

Kapoor leaves the bank as the fifth largest private sector in about 15 years of its life with loan book of ₹2.43 lakh crore and a deposit base of ₹2.22 lakh crore as of December 2018. The bank had a gross NPA of 2.10 per cent.

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on January 31, 2019
This article is closed for comments.
Please Email the Editor