Madhu, kin under qualified for Yes Bk board seat: SL Kapur

For Yes Bank, the current challenge is to get rid of family feud, which continues to turn bitter. Ahead of the crucial board meeting scheduled on June 27, S L Kapur, the former non executive chairman of Yes Bank, endorsed the stance taken by the existing management.

In an interview to CNBC TV18, he reiterated that Shagun Kapur Gogia was not qualified enough to be inducted in the Yes Bank board. Gogia is the daughter of Ashok Kapur who was killed in 2008 terrorist attack in Mumbai. He was the former business partner of Rana Kapoor, who is chairman of the bank.

"Late Ashok Kapur's wife that is Madhu Kapur and their daughter Shagun were not qualifying in view of the norms set by us and in view of the guidelines provided by the RBI and we had a detailed discussion. We just do not picking up people and are bringing them to board. We had desired at that time also, we took the best. I became a (non-executive) chairman and only after I had completed almost four years as a director," he said.

Kapur was a former chief secretary to government of Punjab and was a secretary to the Government of India.

Below is an edited transcript of the interview on CNBC-TV18

Q: You aren't part of the family, are you?

A: No, I am not part of the family and not related to them either.

Q: If you can tell us the backgrounder to this court case and the board meeting that was ordered by the court?

A: I was a Director for a long time then I was a Chairman. I have been associated with the bank from the very beginning and it is very sad that somebody has taken the bank to the court. It is not done. We had a good working board, everybody used to have good cordial relations and we use to have long discussions. When Ashok Kapur was alive, it was a pleasure and at that time I had joined the bank.

Q: As Chairman when the first request came from Madhu Kapur for getting her children on the board?

A: Yes, I was the Chairman in 2009 and I chaired that meeting and we had a discussion on this keeping in view -- banks are very different from normal companies because besides the Sebi and the Companies Act, we are also governed and regulated by the Reserve Bank of India (RBI) and the Banking Regulation Act. They have their guidelines, they have their norms.

The bank has been developed professionally and managed professionally. All our Directors are very well qualified. They have come from best of professions and they bring a lot of experience to the board.

We took this view at that time that late Ashok Kapur's wife that is Madhu Kapur and their daughter Shagun were not qualifying in view of the norms set by us and in view of the guidelines provided by the RBI and we had a detailed discussion. We thought of this and in the interest of the bank, the bank's interest has been the foremost, we have tried everything possible to professionalise the administration. The management is totally professional and the board members are the best possible members. I was proud to be associated with this board and to be part of this body.

Q: It has turned out to be a bitter and open battle, everyday in the papers we read headlines which are to do with Yes Bank.

A: This is unfortunate.

Q: Has it impacted operations? You must have been in contact with the bank on day to day basis, employee sentiment?

A: I am happy. I have been discussing with the employees, I have been discussing with the management of course I am not out of the bank.

Q: What do you think will happen on June 27 because the board once did not approve of the appointment?

A: I cannot say what will happen. They will have to take into consideration the parameters which have been prescribed and the situation which is there now. I cannot predict because I am not part of the board now.

Q: Since the matter has come to head and even gone to court, is there a possibility or was there even a consideration previously to give a conditional approval or simply forward to RBI if it meets the RBI’s fit and proper guidelines. After all there is a graduation in economics and a management degree from Indian School of Business (ISB)?

A: We had to keep the RBI guideline in view. Then we also had to keep our own norms, the experience of the other Directors. What we have been following, you see the team. I’m myself a retired secretary to Government of India, I have specialised in so many things, I was a former chief secretary to Punjab government in the most difficult days.

We just do not pick up people and bring them on board. We had desired at that time also, we took the best. I became a Chairman only after I had completed almost four years as a Director. Therefore, so many things were kept in view. It is not only the RBI guidelines, that is one major factor, but the professionalism of the banks, the board of Directors, the standard of discussions, the expertise which we bring to this body, all that was kept in view.

Q: I will quote an informal chat I had with RBI when we asked them they refused to comment on the record because it is not their problem; they said it is with the court and with the board. But there were statements and observations that if it is going to become such a public issue they could well have just thrown the ball to the regulator and if the regulator is fit and proper we would. The other point also raised was when you were appointing Mr. Rana Kapoor as Managing Director, was there a search committee? He is definitely a professional banker but was he pitted against other professionals and chosen?

A: This was done before I joined the board but he was the promoter. Ashok Kapur was also a banker and both of them were promoters.

Q: Was not the chairman or the board insisting that there should be a distinction between the promoter and the processional CEO, MD? That could also be a standard of professionals?

A: The promoter is a professional banker. He is a promoter and he has been approved from the very beginning. He took the application for a license to the RBI. He followed it up. He collected all the partners and all the shareholders, the original ones and I think he deserves to be the CEO and the MD. There was no doubt about that.

Q: Because of all these developments do you see something to two power centers perhaps developing in the board, alignment of individual board members?

A: No, the board has been professional even when Ashok Kapur was there. We have always discussed everything fairly. There was no factionalism in the board. The debates and discussions were of very high standards. This is not an ordinary board.

Q: Case will again come up for hearing on July 1st. What else is left for the court to pronounce?

A: I will not comment on that. This is a sub judice matter. The court has to take a view on its own. What I will say is that I wish the bank well; as a former chairman, as a person who has seen the bank grow into this great body. You see the value of the shares in 2008 when unfortunately Ashok Kapur was killed in terrorist action and today you see the value of the share. How much have we gained? This is only because of the professional approach both of the management as well as of the board.

Q: Whatever is decided on the board meeting at this end of this month and thereafter once you get the High Court approval will the matter come to rest then?

A: I hope so. I would wish so. I have started liking the bank. It is just kind of a child which has grown up in my care. I would like it to prosper. I would like it to grow. I would like it to be professionally managed as it has been and I would wish it all the best.

Q: The promoter stake was shown as a combined entity in the bank's document. Now will it be shown separately? What do the rules require?

A: I will not be able to tell you what the rules require but whatever statements have to be made, whatever the rules require, I think we have been following them. I have been present in all the AGMs since 2005 when I first became a director. All the shareholders have been present. The reports have been published. The promoter's shares have been shown. Everything has been done.

Q: The combined stake of the two Kapur families, what you can call promoter families is even now between 26-28 percent. The rules obviously require that in course of time it has to be brought down to 10 percent. Can you recall what the timetable was agreed between the bank and the RBI?

A: I will not be able to say. RBI has always been saying that please reduce the shareholding. Last time they indicated a timetable was 31st of March, 2014. That is the date set to bring down the promoter's stake. But how they can do and how much they can bring down that they have to decide.

Q: What is your sense when there is this kind of a dissention within any board? Is it possible that it seeps into the management level because some people are loyal to another family?

A: There is no dissention in the board.

Q: I mean in the promoter family?

A: Dissention in promoter family is there but in the board there is no dissention. The board is not representing one party or another party, they are selected and then approved by the RBI on the basis of their own qualifications, their own experience.

Q: Because of the dissention in the promoter family is it possible that there could be loyalists within the top management of the bank?

A: I cannot visualise a situation where a bank which has been nurtured by all of us gets into this kind of a problem when one faction is working against the other. No, never.

Q: What do you think is going to be the endgame? Will it happen that on 27th the board sticks to its former position and does not approve?

A: I cannot say, because I am not a part of the board. What I think is that there should be a happy ending to all that and we should continue to function and the bank should continue to prosper. That is my wish.