Mumbai: The ongoing crisis at Yes Bank, where three board members have quit in the past six days, deepened with one of them, R. Chandrashekhar, who resigned on Monday, questioning certain corporate governance practices at the bank in his resignation letter. Chandrashekhar has expressed his displeasure over the recent events at the bank and disappointment at the manner in which the lender dealt with these, a person who has seen the resignation letter said, requesting anonymity.
“I have been deeply concerned about recent developments at Yes Bank and dismayed at the manner in which they have been dealt with. It is even more distressing that all this should have occurred during a critical transition period when tact, wisdom and purposeful, well-considered actions were called for," Chandrashekhar said in the letter. He was referring to the recent spate of resignations.
The issues at Yes Bank include the one-year extension sought for Rana Kapoor’s term as chief executive officer (CEO), changes to the selection committee following the resignation of O.P. Bhatt and other exits. Bhatt resigned from the search and selection committee set up to identify a new managing director and CEO.
“Instead of moving smoothly to a new equilibrium, the responses and developments have led to a situation marked by turbulence and churn," Chandrashekhar said in a phone interview on Tuesday.
An email sent to Yes Bank seeking comment went unanswered.
“There have been media reports that my resignation is on personal grounds and that this is part of some board revamp because of the two families looking at a common board. Both are incorrect, as I decided to step down because I was unhappy at the recent developments at the board," Chandrashekhar said. “One must understand that the bank is now in a transitory phase, where a selection committee is looking to find a new CEO, after the RBI declined to give an extension to the current CEO. However, over the past few weeks, the board chairman, the head of the audit committee and an external member of the selection committee have quit. These exits do not create a conducive environment and the impact of all these developments is that I was not comfortable staying on the board and hence decided to step down."
Chandrashekhar said he rejected multiple requests made by the board for him to continue as an independent director because he was “deeply unhappy with the changes and the way they have been dealt with".
Chandrashekhar’s exit comes less than a week after Ashok Chawla stepped down as the chairman of Yes Bank and Vasant Gujarathi stepped down as the head of the bank’s audit committee. Chawla’s resignation was prompted by the decision of Yes Bank’s nomination and remuneration committee (NRC) to write to the Reserve Bank of India on 9 November, seeking its opinion on his role at the bank amid corruption charges against him.
Mint reported on 12 November that NRC wrote to RBI, referring to a 4 October letter that the National Stock Exchange (NSE) received about his continuance on the bank’s board.
While the board in its meeting held on 25 October mandated NRC to verify the charges, the committee failed to grant a personal hearing to Chawla or seek an explanation from him regarding the charges, two people familiar with the developments said on condition of anonymity.
“The NRC acted in great hurry and beyond the scope of its mandate. The objective seemed to be obvious and Chawla felt that he should not overstay his welcome," said one of the two people cited above. Separately, Chawla had sought a probe into the allegations against Kapoor made by an anonymous complainant, the people said.
On 24 September, the complainant wrote a letter to NSE alleging several corporate governance irregularities at the bank. The letter raised questions regarding alleged kickbacks received by Kapoor in real estate and other credit deals, which were routed to his shell companies and his family office. The letter also alleged window-dressing of corporate accounts to conceal actual non-performing assets at the bank.
Varun Sood in New Delhi contributed to this story.