RBI appoints former deputy governor as additional director on Yes Bank board
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 appointment has been made under sub-section (1) of Section 36 AB of the Banking Regulation Act, 1949. According to this section, the RBI can 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."
The appointment is being seen as a precautionary measure, given the bank’s governance issues under the former MD and CEO Rana Kapoor. The new CEO Ravneet Gill, who took over in March, has promised to clean up the bank’s balance sheet and improve governance practices of the bank.
Gandhi’s appointment is aimed at further strengthening the Board and not impede the smooth, independent and effective functioning of the bank in any way. Typically such appointments are made by the RBI to ensure a close supervision on a bank. Earlier, it had also appointed directors on the boards of Dhanalaxmi Bank and Lakshmi Vilas Bank. The bank has seen a management upheaval after its founder Rana Kapoor was forced to step down on account of weak corporate governance culture and divergence in reporting bad loans.