Rana Kapoor: A man driven by a huge sense of self-image

Those who remember Rana Kapoor and his dogged image-building from his earlier years might also recognize the bank he erected after his own image. From a junior banker handling the non-resident Indian business in Bank of America’s Barakhamba Road branch in New Delhi to his exit from Yes Bank as managing director and chief executive, via ANZ Grindlays and Rabobank India, Kapoor’s persisting sense of self-image even pervades the institutional edifice he built.

Kapoor’s former colleagues recall how he would work more than 18 hours at a stretch setting up systems and processes at the young bank which he co-founded with his brother-in-law Ashok Kapur in 2004, micromanaging almost every aspect of the business. All he wanted was to propel Yes Bank to the top ranks of India’s private sector banks. And he did that in a relatively short span of 14 years, with the Street cheering and celebrating every milestone, particularly its impressive set of numbers quarter after quarter.

Yes Bank’s dream-run continued for many years and the law of averages never seemed to catch up. The lender continued to post robust growth numbers even as the broader industry grappled with rising non-performing assets (NPAs), driven by a combination of factors, ranging from excessive leverage, promoter integrity and economic slowdown. But Yes Bank showed no signs of letting up as the aggressive growth streak continued. But somewhere down the line people began asking questions if things were indeed as good as they were made out to be.

“Questions were being asked why Yes Bank was yet to report any significant NPA build-up while others were literally bleeding,” said a senior analyst with a leading brokerage firm, requesting anonymity. But Kapoor fought these allegations furiously, often citing the bank’s smaller size as the key reason why it was able to keep NPAs at bay. “Because it was small and nimble, it said it was able to ring-fence its loans better and could also choose who it wanted to do business with and on what terms,” said the senior analyst.

In private discussions, Kapoor would often cite the example of Kingfisher Airlines led by Vijay Mallya as a case study. Kapoor’s close aides said he claimed that Yes Bank was among the few lenders which recovered almost all loans given to beleaguered Kingfisher Airlines just before it went belly-up, thanks to the bank’s watertight structures. Kapoor also claimed the Kingfisher example was applied to the bank’s entire portfolio.

So when in 2015, global financial services firm UBS put out a negative report on the asset quality of Yes Bank’s books, Kapoor promptly filed a complaint with the capital market regulator against the firm and launched an aggressive campaign to discredit what he called “biased”, “motivated” and unrealistic research by UBS’s analysts.

Kapoor perhaps finally lost the battle of perception when Yes Bank for the second time reported a divergence in gross bad loans of ₹6,355 crore for FY17. The Reserve Bank of India clearly remained unimpressed.

This precipitated Kapoor’s exit from the bank he had crafted in the shadow of his personality, eventually even forcing him to sell out his promoter shares, which he had himself once described as “diamonds”.