A career banker with a long innings at Deutsche Bank, Gill comes in place of Rana Kapoor, the bank’s co-promoter and former MD and CEO.
For the near term, Gill will have to improve relations with the Reserve Bank of India (RBI), which have been strained in recent times. He will also need to strengthen the bank's asset quality and improve governance standards and internal processes.
Gill can lean on the bank’s steady growth in share of low-cost deposits, healthy track record in raising capital and robust operating performance, which will all help him chart a sustainable future course for the private sector lender.
The YES Bank stock gained 2.7 per cent at Rs 237.40 over previous close.
The RBI had refused an extension to Kapoor in October 2018 and allowed him to stay as MD till the end of January. Ajai Kumar, a board member, was made interim CEO in February.
Gill would like to put behind the strained relations with the banking sector regulator. Last month, the central bank had said YES Bank had violated a confidentiality clause by disclosing a nil divergence in non-performing assets (NPAs) based on the RBI’s annual inspection for FY18 (fiscal year 2017-18).
The RBI said the bank's disclosure of only one part of the Risk Assessment Report (RAR) was a deliberate attempt to mislead the public. It also said the RAR identified several lapses and regulatory breaches in various areas of the bank's functioning. YES Bank later said it was acting in compliance with the Securities Exchange Board of India's regulations.
The regulator did not find any divergence in its assessment of gross non-performing assets (NPAs) and those assessed by bank for 2017-18. In the previous two financial years, it had flagged divergence. The regulator had found divergence of Rs 4,176 crore for 2015-16 and Rs 6,355 crore for 2016-17.
Gill, as an outsider, is expected to improve compliance and internal processes at the bank.
YES Bank saw four board-level exits in the past year, in addition to Kapoor. The bank's 10-member board is comprised of several new members including Chairman Brahm Dutt and former Insurance Regulatory and Development Authority of India Chairman T S Vijayan as independent director.
Gill will also need to find a replacement for Senior Group President Pralay Mondal who resigned last month. He will also have to balance the tension between the bank's two promoter groups, led by Rana Kapoor and Madhu Kapur, respectively.
Rating agencies have noted the bank's high loan concentration to corporate groups increases the risk of volatility in the asset performance. Gill will have to work towards improving the bank's loan mix and asset quality while also maintaining the bank's growth trajectory.
Rating agency ICRA has observed that YES Bank continued to show robust operating performance and stable profitability indicators. During FY18, its net interest margin was marginally lower at 2.9 per cent (3 per cent in FY17).
The bank's non-interest based income remains robust, accounting for almost a third of its operating income, while the operating expenses moderated in FY18 over FY17, it added.