Banking regulator RBI has asked Yes Bank Ltd to end Rana Kapoor’s tenure as managing director and chief executive on 31 January 2019, disregarding the bank’s plea to extend his term by three years.
RBI has also asked the private lender to chalk up a succession plan in its upcoming board meeting, as per a person with direct knowledge of the matter said.
In an exchange filing, Yes Bank stated, “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.”
It added that the board of the bank will meet on 25 September to decide on the “future course of action”.
In June this year, the bank’s shareholders at the annual general meeting of 12 June had approved Kapoor’s reappointment, and the bank thereafter had sent the proposal to RBI for approval. It is to be noted that the board of Yes Bank had earlier approved Kapoor’s reappointment as the bank’s chief for three years.
However, in August, Yes Bank informed exchanges that RBI had approved Kapoor’s reappointment till further notice. This development came just a day before Kapoor’s tenure was supposed to end on 1 September 2018.
Given the ongoing face-off between two of the bank’s promoters, Rana Kapoor and Madhu Kapur, RBI’s decision to limit Kapoor’s term may create significant upheavals at Yes Bank as far as finding a successor is concerned.
This is because a 2015 Bombay high court ruling, stated that any new whole-time director on the board of Yes Bank can be appointed only with the consent of all the promoters.
In a similar move this year, the RBI had turned down the re-appointment of Axis Bank CEO Shikha Sharma for three years, despite the fact that it was endorsed by the bank's board. Recently, Amitabh Chaudhry has been named to succeed Sharma as the next CEO of Axis Bank.