The Kapur family will surely be feeling vindicated. The RBI finally did what they might have wished for umpteen number of times. That’s the only thought which came to mind when the news came in.
The face of Yes Bank, Rana Kapoor will get no three year term extension as CEO; RBI has directed that he will have to quit by 31st Jan, 2019.
This is huge news as Rana Kapoor is not a mere CEO; he is the founder and promoter of Yes Bank. Thus to be shown the door to a promoter is a very strong message which RBI has sent across. One never ever thinks in India that a promoter, even if it is of a bank, can be asked to go; we just assume that he remains CEO forever, efficient or no; ethical or no. Thus RBI’s move comes as a surprise.
In the private sector banks, except for HDFC, there are other CEOs who are either out or on their way out. Chanda Kochchar of ICICI Bank is mired in controversy and it would be shameful if she is ever reinstated; Shikha Sharma of Axis Bank is also on her way out as RBI has refused to extend her term too.
RBI found Yes Bank wrongly classifying loans that should have counted as nonperforming. And similar issues over NPAs at Axis Bank too. So if the term was not extended for Sharma, it is only fair that the same rule is applicable to Kapoor too.
It is rare but very heartening to see RBI exercise its power. Sadly, we can only rue its lack of power when it comes to taking such stern action when it comes to PSU banks. If RBI had been given that power, maybe the Indian banking system would not have been in the big mess it is today.
There is enough evidence which shows that Kapoor did not care enough for good governance; it was important but there are instances of it being twisted slightly to suit the needs. In 2016, SEBI investigated the Bank for its planned equity placement, the surge in the Yes Bank scrip in the run-up to the issue date and its intra-day fall before the announcement to call off the issue. SEBI also questioned the Bank as to why it gave no pre-intimation to stock exchanges that there would be a board meeting. This blotched up QIP did tarnish the image of the Bank and one started looking at everything that Kapoor did will more scrutiny.
Over and above everything else, even more than Kapoor’s achievements at Yes Bank and taking it to where it is today, people will remember the bitter battle between him and his friend, co-worker and founding partner, Ashok Kapur’s family. Throughout the long drawn fight, what we could never forget and forgive is the fact that Kapoor allowed petty family politics to cloud the Board. The fact that he tried to obliterate the name of Ashok Kapur who died an unfortunate death was simply unfair. Not allowing his daughter a place on the Board was a mistake as she had one important quality which no “outsider” ever had – emotional value for Yes Bank. If Rana had not systematically tried to decimate the name of Ashok Kapur and take away the rights of the Kapur’s, hurting them with these actions, this fight would have never happened. Now that’s something he will have to live with…
Well, let bygones be bygones; the world has its own way of justice. At this moment, RBI does deserve a pat on its back for making this bold move – it has shown that it has the teeth and can bite.
The markets are sure to grieve and sulk over this move of RBI and Yes Bank will see price correction. No doubt, Rana Kapoor is a dynamic CEO and responsible for taking Yes Bank to new heights but no person on this earth is indispensable, however good or great he/she may be.
Does Yes Bank remain a good buy post Kapoor? Our Editor SP Tulsian advices one to buy when the price slumps as what Kapoor has built, will sustain much beyond him.