RBI man in Yes Bank brings back concerns

 The Reserve Bank of India last year block an extension to Yes Bank founder Rana Kapoor as the CEO, forcing the bank to quickly find a successor.

Published: 16th May 2019 05:03 AM  |   Last Updated: 16th May 2019 11:37 AM   |  A+A-

Express News Service

MUMBAI: The Reserve Bank of India last year block an extension to Yes Bank founder Rana Kapoor as the CEO, forcing the bank to quickly find a successor. The bank, which was under the RBI scanner for divergence in reporting bad loans, got pulled up for declaring “Nil Divergence” earlier this year. After a shocking first-ever quarterly loss announcement by the bank, comes the appointment of former RBI deputy governor R Gandhi as a nominee director on its board. 

Yes Bank, in a regulatory filing on Tuesday, said that RBI, via a letter dated May 14, informed the bank that it has appointed Gandhi for a period of two years with immediate effect. In another filing on Wednesday, the bank said it heartily welcomes the appointment and that it will significantly strengthen its board. 

“RBI’s move to nominate an additional director on the Board of Yes Bank once again brings back concerns of governance issues. Coming on the back of recent downgrade in earnings and tight capital adequacy situation at the bank, the stock can further get de-rated owing to uncertainties on the growth outlook ahead. We have cautious view on the stock,” said Lalitabh Srivastawa, AVP-Research, Sharekhan by BNP Paribas.  

For several months now, the stock has had a bumpy ride. It closed 8 per cent lower on BSE at `143.65. 
Though the RBI appointment on private bank boards is not new, Yes Bank investors would be worried about the bank’s growth if its capital raising efforts are constrained. 

The bank’s board had a plan to raise up to `20,000 crore in Indian or foreign currencies, and up to $1 billion as FCCB, GDR or ADR at the recent board meeting. Ravneet Gill, who had assumed charge as MD & CEO only in March, also gave a reassuring word at that time, promising to maintain highest standards of compliance and prudence in risk.

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