RBI wants Yes Bank to find Rana Kapoor’s replacement
The Reserve Bank of India (RBI) has also asked Yes Bank to draw up a succession plan in its upcoming board meeting
Mumbai: The banking regulator has asked Yes Bank Ltd to end Rana Kapoor’s tenure as managing director and chief executive on 31 January, disregarding the bank’s plea to extend his term by three years.
The Reserve Bank of India (RBI) has also asked the private lender to draw up a succession plan in its upcoming board meeting, a person with direct knowledge of the matter said, requesting anonymity.
“The Reserve Bank of India has vide letter dated 17 September, 2018 received on Wednesday, intimated that Rana Kapoor may continue as the MD & CEO till 31 January 2019,” Yes Bank said in an exchange filing, adding that the board of the bank will meet on 25 September to decide on the “future course of action”.
The bank’s shareholders at the annual general meeting of 12 June approved Kapoor’s reappointment, and the bank thereafter had sent the proposal to RBI for approval.
The board of Yes Bank had earlier approved Kapoor’s reappointment as the bank’s chief for three years. However, on 30 August, Yes Bank informed exchanges that RBI had approved Kapoor’s reappointment till further notice. Kapoor’s tenure was supposed to end on 1 September 2018. RBI’s approval in August had come after it asked the board to reconsider his appointment for another three years.
Against the backdrop of an ongoing face-off between two of the bank’s promoters, Rana Kapoor and Madhu Kapur, RBI’s decision on Wednesday may create significant uncertainties at Yes Bank in terms of finding a successor for Kapoor. This is because a 2015 Bombay high court ruling, which favoured Kapur, stated that any new whole-time director on the board of Yes Bank can be appointed only with the consent of all the promoters.
As on 30 June, Kapoor held a 4.34% stake in Yes Bank, while Kapur owned 7.62%. Other promoters include Yes Capital (India) Pvt. Ltd (3.28%), Morgan Credits Pvt. Ltd (3.05%) and Mags Finvest Pvt. Ltd. (1.7%).
Yes Bank will now request RBI to reconsider its Wednesday’s decision on appointment of Kapoor only till January 2019, said two people familiar with the lender’s plans.
“Since the promoters are yet to resolve their issues, it will be difficult to get a consent from all the promoters on the appointment of a new whole-time director and as per the rules, only a whole-time director can be appointed as the bank’s managing director. So, bringing a successor will be an uncomfortable task,” said the first person.
- RBI slaps Rs 1 crore fine on Indian Bank for violating cyber security norms
- OweMe raises $1 million in seed round from Pi Ventures
- Petrol, diesel prices cut again today, down Rs 11-Rs 14 a litre in two months
- Aavishkaar sells 25% stake to US pension fund TIAA’s Nuveen
- iPhone ban in China may push Apple, Qualcomm toward settlement
Editor's Picks »
- Steel stocks get winter chill as China demand issues resurface
- Why Uday Kotak’s defiance is scaring his bank’s investors
- Exit RBI governor Urjit Patel, enter wrath of the markets?
- The government has a troubling message for minority shareholders
- Opec-allies’ output cut may not amount to big shift in oil prices