'Approval for Srinivasan at YES Bank was for one year'

The Reserve Bank of India (RBI) on Tuesday said it had approved the appointment of M R Srinivasan on YES Bank’s board only for a year.  The appointment of the 69-year-old former RBI executive is currently being contested by Madhu Kapur, widow of YES Bank’s co-founder Ashok Kapur.

The Kapur family has questioned the appointment of Srinivasan and Diwan Arun Nanda (also 69) on YES Bank’s board, as according to the Ganguly Committee, banks’ board members should be between 35 and 65 years. However, the banking regulator had relaxed the upper age limit for non-executive directors by five years. “There is an age limit of 70 years but it is not a hard limit. When he was appointed, he was well short of 70. He has been given approval for one year. Some part of his term may go beyond 70,” Anand Sinha, deputy governor at RBI, told reporters when asked about the YES Bank issue, in Mumbai on Tuesday.

Srinivasan was appointed as an additional director on YES Bank’s board with effect from October 23, 2012. In the annual general meeting on June 8, 2013, Madhu Kapur had objected the appointment of Srinivasan, Nanda and Ravish Chopra on the bank’s board. However, the general body of the shareholders had approved the appointments with a majority vote of 80 per cent and elected all three directors.

“We are studying the boardroom battle, which is going on (at YES Bank). If we think that some measures need to be taken, we will take them,” Sinha said.

On YES Bank's decision to reject Madhu Kapur's daughter Shagun Kapur Gogia on its board, Sinha said RBI will not get involved in this issue.

'As I said, as far as we are concerned, the Banking Regulation Act lays down norms on specialisation. Here, as per the media reports, the board seems to feel that the candidate (Gogia) is not the same level as others. That is their perception and we do not come into this,' he said when asked about Gogia's nomination.

YES Bank's board had earlier rejected the application to appoint Gogia as one of its members after evaluating the past and present composition of the bank's board and composition of the boards of some of the other private banks in the country.