MUMBAI: The Reserve Bank of India (RBI) has appointed former deputy governor Rama Subramaniam Gandhi as an additional director on the board of Yes Bank for two years, from 14 May 2019 to 13 May 2021, the bank said on Tuesday in a notice to the stock exchanges.
The appointment has been made under sub-section (1) of Section 36 AB of the Banking Regulation Act, 1949, the private sector lender said. The RBI can, according to this section, appoint additional directors “if the Reserve Bank is of [opinion that in the interest of banking policy or in the public interest or] in the interests of the banking company or its depositors it is necessary so to do, it may, from time to time by order in writing, appoint, with effect from such date as may be specified in the order, one or more persons to hold office as additional directors of the banking company."
Gandhi’s appointment comes against the backdrop of Yes Bank reporting a loss of ₹1,507 crore for the March quarter, driven by a 9-fold increase in provisions. Rating agencies Icra and India Ratings have both downgraded the long-term ratings of the bank.
RBI’s decision to appoint Gandhi to the board of Yes Bank is seen as a precautionary measure, given the governance issues under the previous managing director and CEO Rana Kapoor. The new chief executive officer (CEO), Ravneet Gill, has promised to clean up the bank’s balance sheet and improve governance practices of the bank.