BackGogia answers Yes Bank queries ahead of board meet
Yes Bank asked questions about the stakes that Gogia owns, her business expertise, details of close relatives
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Mumbai: Shagun Gogia, who filed her nomination for a seat on the board of Yes Bank Ltd on 17 June, has submitted answers to the additional declarations and undertakings the bank sought ahead of its board meeting on Thursday.
The court directed Yes Bank to consider Gogia’s appointment on 11 June. The case will come up for hearing on 1 July.
In a letter dated 21 June, a copy of which is with Mint, Yes Bank has asked questions about the stakes that Gogia owns in companies, her business expertise and details of close relatives that include her mother, father-in-law, mother-in-law, husband, children, brothers and sisters. The letter was signed by the bank’s company secretary Shivanand Shettigar and group president audit and compliance Devamalya Dey.
In her reply on 24 June, a copy of which is also with Mint, Gogia’s mother Madhu Kapur said neither the Reserve Bank of India (RBI) nor Companies Act circulars classify father-in-law or mother-in-law as “close relatives".
“We are advised that the law and guidelines do not contemplate the several items of information sought for by way of additional information and documents and as such are unnecessary. However... we are furnishing the information/data and documents requested," Madhu Kapur said in the reply addressed to Shettigar and Dey.
A Yes Bank spokesperson said the additional questions were necessary because the bank did not want to be caught unawares in case there was a query from any board member.
“There was a change in her earlier profile because she had stepped down from directorships of companies. We also wanted to be sure that she is not part of any NBFC (non-banking finance company) because RBI norms forbid it. We wanted to ensure that the board had all the information it needed and the candidate is represented fairly. We wanted to be safe so that all aspects are covered because as the matter is in courts, the board cannot delay its decision due to inadequate information," the spokesperson said.
Krishnamurthy Subramanian, assistant professor of finance at Indian School of Business, Hyderabad, said though the definition of relatives is not as broad in corporate law, the bank’s questions are “legitimate".
“It may not be in the letter of the law but this information is necessary and should be included most of the time especially in the case of banks because banks deal with public money and any exposure by directors or their material relatives could put both depositors and shareholders at risk," Subramanian said.
In its letter, Yes Bank said that the initial declaration submitted by Gogia “is not in revised form... hence we request you to submit the declaration and undertaking as per the revised RBI format". The RBI nomination form is a part of the so-called RBI “fit and proper" criteria.
The bank also asked for additional information to be submitted before 24 June, including whether Gogia holds any stake in an NBFC, shareholdings of Gogia in companies where she has interests, her career progression and her areas of expertise.
Before filing her nomination, Gogia sold her 99.37% stake in the investment advisory company she co-founded called Tuscan Ventures Pvt. Ltd, to her mother. She has also resigned from Tuscan’s board to avoid any conflict of interest that could deny her a board seat at Yes Bank.
Tuscan continues to operate an account in Yes Bank, though the company’s overdraft facility and fixed deposits have been withdrawn by Gogia. Also, LCL Logistix (India) Pvt. Ltd, of which Tuscan owns 15% shares, is in the process of shifting its ₹ 58 crore worth of loans and letters of credit to another bank.
Since 7 June, when the news of the case filed by Gogia seeking a board seat became public, Yes Bank shares have dropped 11.71% compared with the 4.96% fall in the benchmark Sensex, and the 10.7% drop in the 14-share Bankex. On Wednesday, Yes Bank Ltd gained 0.07% to close at ₹ 448.1 per share on BSE, while the Sensex lost 0.41% to close at 18,552.12 points.
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