Yes Bank has announced that its Board of Directors will meet on December 13, to discuss the induction of a successor to its chief executive and the appointment of a Chairman and independent directors, among other issues. Yes Bank is currently searching for someone to replace Rana Kapoor, managing director and chief executive officer of the bank, after the Reserve Bank of India (RBI) did not grant an extension to his current term beyond January 2019.
The bank's outlook and governance record has been marred, say experts, after the resignation of three board members over the last two weeks.
Two members of the banks' board, Ashok Chawla and Vasant Gujarathi, resigned from the board on November 14 and a few days later, independent director Rentala Chandrashekhar resigned, stating that he was deeply concerned about recent developments at Yes Bank and was dismayed over how the issues were handled at a time when the bank needed to carefully transition towards a new leadership.
Further, former State Bank of India Chairman, O P Bhatt, resigned from the bank’s Search and Selection Committee (SSC) citing “potential conflict of interest."
In a letter issued on Tuesday, Brahm Dutt, chairman of Yes Banks' Nomination and Remuneration Committee (N&RC) and Kapoor, said, “The Board would now consist of seven members with the addition of one Board member Uttam Prakash Agarwal concurrently. All the seven Board members are fully committed to discharging their duties on the Board, as also enabling Yes Bank to manage and emerge from the current transition period, said
Chandrashekhar, former Nasscom president and telecom secretary, joined the bank in April for a tenure of seven-and-a-half years. He also quit as chairman of the bank’s information technology strategy committee.
While sources at the bank told Business Standard that senior executives, including Kapoor, tried to convince him to stay at least until April 2019 and see through the transition as it would "mitigate the adverse market impact", Chandrashekhar did not budge.
It was rumored that Chandrashekhar resigned from the board due to 'personal reasons,' but in a conversation to Business Standard on November 20, he confirmed that this wasn't true.
In their letter, Bhatt and Kapoor said the latest resignations "bear no impact on the new MD and CEO selection process. Therefore, the new MD and CEO selection process is on track, as per committed timelines. The SSC and the N&RC are scheduled to convene on December 12, 2018 to discuss the final shortlist for new MD and CEO appointment."
The Board of Directors is scheduled to meet on December 13 and will discuss the replacement of two of its independent directors and will short-list a director with Information Technology and Cyber Security expertise.
The board will also evaluate the criteria for the selection of a new chairman, subject to RBI approval, and will seek a review from the SSC on the progress on finding a suitable successor to Kapoor.
"It is being reported by the MD and CEO Rana Kapoor, who is also the largest shareholder and promoter of the Bank, that efforts are underway for mutual resolution with Madhu Kapur and family, the co-promoter of the Bank. This is intended to ensure better support and coordination by the two promoter groups with the Board of Directors of the Bank," the letter added.
The bank's stock price closed at Rs 198.4 on the NSE, up 3.28 per cent from its previous closing price.