Churn Within Yes Bank Board Continues As Another Director Steps Down
Yes Bank informs stock exchanges of another board exit. The bank’s board of directors has seen significant churn since November.
Private sector lender Yes Bank Ltd. continues to see a churn at the board level with another two directors stepping down this week.
The churn comes after a reshuffle of the bank’s top management with founder chief executive Rana Kapoor stepping down after being denied an extension by the Reserve Bank of India. Kapoor, who continues to hold 10 percent in the bank, was replaced by Ravneet Gill as CEO in March.
On Tuesday, Mukesh Sabharwal, who has been non-executive independent director on the board of the bank since April 2012, stepped down, the bank informed stock exchanges on Tuesday. Sabharwal cited a desire to “devote quality time” to his academic pursuits, the bank said in its statement. Sabharwal “has confirmed that there is no other material reason other than those provided” for the resignation.
This was the second such resignation this week.
On Monday, the bank had disclosed that Ajai Kumar, who was a non-executive, non-independent director on the board, has stepped down. Kumar, who had served as the bank’s interim CEO for one month after Kapoor’s exit, also cited personal reasons for his exit.
On May 14, the bank informed stock exchanges that the RBI had appointed former deputy governor R Gandhi as an additional director on Yes Bank’s board. The move was seen as a rare regulatory intervention to ensure increased scrutiny of the bank.
Just weeks before that, Shagun Gogia, daughter of late co-founder Ashok Kapur, had been inducted into the board after the two co-founder families buried the hatchet following a prolonged battle over the rights given to the bank’s promoters. The bank also appointed Ravinder Kumar Khanna to the board as a nominee of the promoters, who are collectively permitted three board seats as per the bank’s Articles Of Association.
Rumblings within the Yes Bank board had begun last year after the lender came under pressure for under-reporting of bad loans while Kapoor was still CEO. Yes Bank had reported two consecutive years of divergence in bad loan reporting, which was seen as a key reason behind the RBI’s denial of another term to Kapoor.
Changes at the board level began soon after Kapoor’s term was cut short in October.
In November, Ashok Chawla, who was non-executive, independent, part-time chairman of the bank since Oct. 30, 2016, stepped down. In a statement then, the bank said that Chawla was stepping down as the bank would need a chairman who can devote more time to the lender during the management transition. Vasant Gujarathi, who was also an independent director and head of the bank’s audit committee, stepped down at the same time.
The same month R Chandrashekhar stepped down as independent director. In his resignation letter, Chandrashekhar said he was “deeply concerned about recent developments at Yes Bank.”
In December 2018, TS Vijayan, the former chairman of the insurance regulator and the Life Insurance Corporation of India, was appointed as an additional independent director. A month prior, eminent chartered account Uttam Agarwal was brought on as an independent director as well.
The latest resignations mean that only three board directors — Subhash Kalia, Pratima Sheorey and Brahm Dutt — continue from days when Kapoor was CEO.
“The recent resignation of Board members of Yes Bank adds to the growing number of board member exits seen since last year,” said Lalitabh Shrivastawa, assistant vice president for research at Sharekhan by BNP Paribas. “Coupled with the recent rating downgrades, we believe it is an overhang on the stock performance.”