New Delhi: Yes Bank Ltd’s board has recommended clawing back of bonuses paid to managing director and chief executive Rana Kapoor for two years ended 31 March 2016 following adverse observations made by banking regulator the Reserve Bank of India (RBI). The board has also recommended that no bonuses be paid to Kapoor for fiscals 2016-17 and 2017-18 and didn’t propose any bonus for the following year, according to documents reviewed by Mint. It has recommended not to raise Kapoor’s salary for 2017-18 as well as for the current year, the documents said.

The board’s recommendations have been sent to the banking regulator for its final approval, according to the documents.

RBI has already asked Yes Bank to end Kapoor’s tenure as managing director and chief executive on 31 January 2019, ignoring the bank’s plea to extend his term by three years. In June, Yes Bank sought a three-year extension for Kapoor till 31 August 2021, but the regulator agreed to extend his tenure only till 31 January 2019 and asked the lender to draw up a succession plan.

While queries emailed to an RBI spokesperson on Thursday evening remained unanswered, a spokesperson for the private lender said, “Yes Bank as a policy does not like to comment on regulatory matters."

“RBI’s censure and the board’s subsequent decision regarding clawback of the bonuses paid and no salary hike doesn’t reflect very well on anyone," a person aware of the board’s recommendations to the banking regulator said on condition of anonymity.

The board has also requested RBI to grant extension to Kapoor till at least 30 April 2019 for the finalization of audited financial statements for the year ended 31 March. In addition, the Yes Bank board has requested a further extension of Kapoor’s tenure till 30 September for the statutory annual general meeting process to be over.

The board has told RBI about its 25 September board meeting’s decision to engage a consulting firm for a comprehensive risk, governance and compliance review. Also, it informed RBI of its decisions to set up a search and selection committee to identify a successor to Kapoor and promote Rajat Monga and Pralay Mondal as executive directors, subject to approval from the regulator. Monga and Mondal are currently senior group presidents at the bank.

Yes Bank has hired Korn Ferry to find Kapoor’s successor. “The bank had invited proposals from four global leadership advisory firms specializing in BFSI (banking, financial services and insurance) to assist the ‘search and selection committee’ in identifying a suitable successor to Shri Rana Kapoor," the bank said in an 11 October statement. “Based on assessments and presentations made by these global advisory firms, the ‘search and selection committee’ has mandated Korn Ferry to assist the Committee in evaluating candidates."

This comes at a time when Yes Bank’s estranged promoters, Rana Kapoor and Madhu Kapur, have initiated moves to reach an out-of-court settlement, Mint reported on 8 October. Kapur, widow of co-founder Ashok Kapur and the bank’s second largest shareholder, has communicated to the Yes Bank board that its decision to request the regulator to extend Kapoor’s tenure is not in the best interests of the private lender.

At the end of June, Kapoor held a 4.34% stake and Kapur 7.62%. Other promoters are Yes Capital (India) Pvt. Ltd (3.28%), Morgan Credits Pvt. Ltd (3.05%) and Mags Finvest Pvt. Ltd. (1.7%).

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