Rana Kapoor, chief executive officer and managing director of Yes Bank Ltd. (Photographer: Udit Kulshrestha/Bloomberg)

Rana Kapoor To Continue As Yes Bank CEO Till ‘Further Notice’ From RBI

Private sector lender Yes Bank Ltd., in a terse one line communication to stock exchanges, said that the Reserve Bank of India has allowed Rana Kapoor to continue as chief executive office of the bank ‘till further notice’.

The communication comes one day before Kapoor’s current term ends - on September 1. Kapoor has been the bank’s CEO since 2003.

We wish to inform you that the Bank has received the RBI’ s approval that Rana Kapoor may continue as Managing Director and CEO of YES Bank till further notice from RBI.   
Yes Bank Statement

The wording of the communication suggests that the regulator is still to approve Kapoor’s appointment for the full three-year term.

In June, the board of Yes Bank had decided to re-appoint Kapoor as MD and CEO for a period of three years and the bank received shareholder approval for the same as well. As is the case with all banks, the appointment was subject to approval of the RBI.

On Wednesday, Aug. 29, CNBC TV-18 reported that the RBI had communicated with the board of Yes Bank asking them to reaffirm Kapoor’s appointment. The board had chosen to back Kapoor, the report said. BloombergQuint could not independently confirm this.

An email sent by BloombergQuint to Yes Bank earlier this week, seeking clarity on Kapoor’s reappointment, was not answered.

Kapoor was among the founding team of Yes Bank, along with Late Ashok Kapur who died in 2008. As promoter he and his family own a 10.66 percent stake in the bank.

Greater Regulatory Scrutiny

The banking sector has seen increased regulatory scrutiny over the last two years as the RBI has tried to push for appropriate recognition of bad loans. The asset quality review conducted in 2015-16 has led to an increase in bad loans across banks, including Yes Bank.

Lenders have also been asked to disclose ‘divergences’ in bad loan reporting. This divergence is the difference between the bad loans as assessed by the RBI and the bank.

For FY17, the RBI judged gross NPAs at Rs 8,373.8 crore for Yes Bank. The bank, however, had reported gross NPAs at Rs 2,018 crore. The consequent divergence was at Rs 6,355 crore or three times the reported amount.

In FY16, the bank reported just a sixth of the bad loans assessed by the regulator. According to its latest annual report, the bank had reported gross NPAs worth Rs 748.9 crore as on March 31, 2016, while the RBI assessed the bank’s gross NPAs at Rs 4,925.6 crore.

To be sure, other banks too have reported a significant divergence in bad loan reporting.