Yes Bank extends CEO's tenure by 6 months: Move to help SMBC steer strategy

The six-month extension given to Yes Bank chief Prashant Kumar aims to give incoming shareholder, Sumitomo Mitsui Banking Corporation (SMBC), room to decide the lender's leadership and strategy once the ownership changes, said industry insiders.

 

The private-sector lender last week told exchanges the Reserve Bank of India (RBI) had approved Kumar’s extension as managing director (MD) and chief executive officer (CEO) till October 6. However, Yes Bank did not say how long an extension it had sought for Kumar.

 

Kumar has led the bank since its reconstruction in March 2020. He was first appointed the bank’s administrator and later made the MD & CEO. Before that, he was deputy MD and chief financial officer of State Bank of India (SBI).

 

Kumar received his first extension as Yes Bank MD & CEO in October 2022 for a three-year period.  ALSO READ: RBI gives Yes Bank MD & CEO Prashant Kumar 6-month extension: Lender

 

After SMBC announced that it will buy a 20 per cent stake in the private lender from SBI and others, reports said that Yes Bank’s board is considering appointing a new MD & CEO and has engaged a headhunting agency to assist in the search. (SBI and other lenders had chipped in to reconstruct Yes Bank for over Rs 13,000 crore.)

 

Kumar, over five years, has shifted the bank’s focus from “affluent” to “mass affluent” customers and transformed its corporate-heavy book into largely retail, including MSME. Retail and SME books together constitute 60 per cent of its total loan book, compared to 36 per cent in March 2020. The bank’s asset quality has improved with gross non-performing assets at 1.6 per cent at the end of March 2025, compared to almost 17 per cent at the end of March 2020.

 

“We are talking about the next five years because we have made the balance sheet strong enough, where the future earnings are not going to be impacted because of any past impact,” Kumar told ‘Business Standard’ last month.

 

Yes Bank’s growth trails peers as it follows a conservative approach. It intends to grow its loan book by 12-15 per cent in FY26, with retail book growing at 10-12 per cent. 

 

The RBI is allowing leeway for new shareholders to take their call about the bank’s management, according to Abizer Diwanji, founder of NeoStrat Advisors LLP. The expectation seems to be that regulatory approvals will be secured in six months, allowing the new ownership (along with their representatives on the bank’s board) to decide the bank’s leadership.

 

“Under Kumar, the bank’s retail strategy is yet to play out well. The cost-to-income ratio remains elevated, highlighting the need for more corrective measures on the retail front. Additionally, priority sector lending obligations have put pressure on margins, and key metrics like return on assets (RoA) and return on investment have shown limited improvement. That said, Kumar’s conservative approach has helped keep asset quality at a manageable level,” said Diwanji.

 

The bank aims to have a RoA of 1 per cent by FY27. In FY25, the RoA was at 0.6 per cent. It hopes to reach 1.5 per cent RoA in the next four-five years, Kumar had said previously.

 

“The bank has performed reasonably well, with shareholders — including SBI and other private sector banks — doubling their investment over the past five years. The six-month extension granted to the current MD & CEO provides flexibility to the new shareholder, SMBC, to decide on the leadership that will drive their strategic vision for the bank going forward,” said an industry expert, who did not wish to be named.

 

“Therefore, the shorter extension for the incumbent MD & CEO is likely not a reflection of performance, but rather a move to allow the new stakeholder greater flexibility in shaping the bank's future,” said the expert.