YES Bank Managing Director (MD) and Chief Executive Officer (CEO) Rana Kapoor will have to step down from his position early next year, as reported by Business Standard.
Reserve Bank of India (RBI) had allowed Kapoor to continue only till 31st January 2019, as confirmed by the private sector bank.
“The board of directors of the bank is scheduled to meet on September 25 to decide on the course of action,” YES Bank said in a filing to the stock exchanges.
According to sources, corporate governance and regulatory issues were being cited by the RBI, for not extending Kapoor’s term. Further, the lender has been directed to search for a successor.
Uncertainty over Kapoor’s continuance as MD and CEO for three more years emerged at the end of August 2018, when the RBI postponed its decision on YES Bank’s proposal to grant him the extension. On 30th August, the RBI, however, allowed him to continue till further notice.
In June, YES Bank’s shareholders had cleared the reappointment of Kapoor for three more years. This was then sent to the RBI for final approval. Experts said the RBI’s latest move might not put an end to the uncertainty, and investors would take time to regain confidence in the bank.
Sandeep Parekh, founder, Finsec Law Advisor, quoted to BS that it was quite a disruptive move for the lender as there was no succession plan in place.
“Finding a successor in four months is not sufficient. This will impact not only investor confidence but also the whole governance at the bank,” he added.
This is the 3rd private sector bank that will be seeing a change in management in the current financial year.
Last year October 2017, under fire from investors for the large divergence between its own bad loan count and that of its regulator, Axis Bank Ltd’s chief executive officer (CEO) Shikha Sharma had told The Economic Times,
“We are obedient children. They (RBI) told us do it (make additional provisions). We did it.”
Ironically, less than six months later, the central bank had expressed its displeasure with the lender’s decision to continue with Sharma as CEO, according to reports.
The bank’s board had in December 2017 cleared Sharma’s reappointment for a further three year tenure and sent the proposal to the RBI for approval. Her current term was due to end on 31st May 2018, and subsequently renewed. However, she herself decided to step down on 31st December 2018 after nine years of serving the bank in the same position. She will be replaced by HDFC Life’s, Amitabh Chaudhary.
While Chanda Kochhar of the ICICI Bank is currently on leave after the Bank decided to probe allegations of conflict of interest and quid pro quo against her while dealing with certain customers/borrowers of the bank including Videocon.