New Delhi: Yes Bank founder Rana Kapoor Friday said he is very much in India but didn’t have much to say about the Reserve Bank of India’s surprise decision to supercede the board of the bank and place it under moratorium for one month.
“What can I say?” Kapoor told ThePrint when reached by phone, a day after RBI seized the bank and also capped withdrawals at Rs 50,000 for Yes Bank’s depositors.
Asked how he had nothing to say considering he was the founder of the bank, Kapoor replied: “I was the founder of the bank. But I have had nothing to do with it for the last 14 months. You should talk to (Chairman) Brahm Dutt and (CEO) Ravneet Gill. They are the ones responsible for whatever has happened at the bank in the last one year.”
Kapoor also rejected talk that he had left India and moved to London about four months back.
“I had gone for two weeks to visit my daughter as she had a baby. I am back in Mumbai now and you are welcome to meet me at my Worli residence,” Kapoor said, adding that he was in a car driving on Marine Drive during the phone conversation.
Kapoor completely exited the shareholding of Yes Bank and did not hold any shares in the company either directly or indirectly as of December-end, the bank said in a stock exchange filing.
Some officials at Yes Bank and sources in government agencies were under the suspicion that Kapoor had left the country a couple of months back.
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Kapoor was forced to step down as the CEO of the bank on 31 January 2019 after the Reserve Bank of India in 2018 rejected the Yes Bank board’s recommendation to extend his term by three years until August 2021.
RBI had flagged serious regulatory lapses and corporate governance concerns and expressed its discomfort in extending Kapoor’s tenure as CEO of the bank.
The moratorium placed on the bank by RBI will last for 30 days, RBI said in a statement, adding that during this time effort will be made either for an amalgamation or reconstruction.
“The financial position of Yes Bank Ltd. (the bank) has undergone a steady decline largely due to inability of the bank to raise capital to address potential loan losses and resultant downgrades, triggering invocation of bond covenants by investors, and withdrawal of deposits. The bank has also experienced serious governance issues and practices in the recent years which have led to steady decline of the bank,” RBI said justifying its move.
The decline of Yes Bank
Yes Bank was incorporated in 2003 and went on to list on the stock exchanges in 2005.
Rana Kapoor and his brother-in-law Ashok Kapur co-founded Yes Bank. Ashok Kapur became the chairman of the bank and Rana Kapoor the managing director and CEO. While Rana Kapoor had 26 per cent stake in the bank, Ashok Kapur had an 11 per cent stake.
However, after the death of Ashok Kapur in the 26/11 terrorist attacks, the two families had a falling out leading to a prolonged legal battle between Ashok Kapur’s widow and Rana Kapoor over appointment of board directors and a greater say for the former in the running of the bank and board appointments.
The bank rapidly expanded its lending books and customer base focusing on corporate and MSME lending. Many attributed the aggressive lending approach adopted by Kapoor, especially to large and sometimes troubled corporate clients, for the rapid expansion of the loan book. Yes Bank, under Rana Kapoor’s reign, was sometimes referred to in banking circles as the lender of last resort for troubled companies.
The bank’s market cap increased manifold during this period to reach a peak of Rs 1 lakh crore in August 2018.
Rana Kapoor, just a month after the shares attained their peak, had likened the shares to diamonds and stated that he will bequeath his shares to his three daughters with a request to never sell these shares.
Diamonds are Forever: My Promoter shares of @YESBANK are invaluable to me
— Rana Kapoor (@RanaKapoor_) September 28, 2018
I will eventually bequeath my @YESBANK Promoter shares to my 3 daughters and subsequently to their children, with a request in my Will stating not to sell a single share, as Diamonds are Forever!!
— Rana Kapoor (@RanaKapoor_) September 28, 2018
However, since then the market cap has eroded drastically as the bank unravelled, struggling to raise capital amid concerns over the strength of its books.
Its profitability has also been hit and bad debt has also sharply increased. The bank reported a loss of Rs 600 crore in the quarter ended September 2019. It is yet to declare its December quarter results.
Gross NPAs or the amount of bad debts as a percentage of the loan book also increased to 7.4 per cent in the September quarter from 5 per cent in the preceding quarter and 1.6 per cent in the corresponding year-ago period.
Over the whole of last year, the bank under its new CEO Ravneet Gill has been trying to raise capital, albeit unsuccessfully.
The new CEO has been under criticism for prematurely making announcements about potential investors before finalising fund raising.
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