Mumbai-based Yes Bank said it would seek the Reserve Bank of India's (RBI) permission on Thursday to appoint a successor to Rana Kapoor as managing director (MD) and chief executive officer (CEO) as the deadline set by the central bank to find a new person at the helm is just three weeks away.
The announcement comes after the board of Yes Bank, India's fifth largest private-sector lender by assets, met at its Mumbai headquarters to finalise the shortlist of potential candidates to succeed Kapoor.
Sources told CNBC-TV18 that at least three potential CEO candidates will be sent to the RBI. These include both internal and external candidates, they said, asking not to be named.
While Rajat Monga, executive director at Yes Bank, is widely seen as the internal choice, the external candidates could include the likes of Rajesh Sud, the former MD of Max Life.
In a letter dated September 17, 2018, RBI cut short the tenure of Kapoor as MD and CEO to January 31, 2019, rejecting the board's proposal to hand him a three-year term.
Lapses in governance at the bank, poor compliance culture and two consecutive years of divergence reporting in its bad loans were the key reasons why RBI asked Kapoor to leave the bank he founded in 2004, according to people familiar with the matter.
The bank subsequently sought an extension for Kapoor, its founder CEO, beyond January 31, but even that was turned down by the RBI. This resulted in a series of departures from the bank’s board.
Yes Bank Ltd said last month that it was on track to find a new CEO within the RBI’s January 31 deadline, but its shares have been taking a ponding due to the uncertainty surrounding the matter.
Yes Bank shares fell 3 percent to hit Rs 186.40 at close of trade on the Bombay Stock Exchange on Wednesday.
While RBI took almost nine weeks to approve the new CEO for Axis Bank, but for Yes Bank, there are only 21 days remaining.
If RBI approves a name before January 31, it may be business as usual for Yes Bank. If it does not, the bank may have to approach RBI again to either appoint an interim CEO or to seek an extension for Kapoor until his successor is named.
First Published: Jan 9, 2019 6:27 PM IST
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