File Photo: A security guard stands outside a closed Yes Bank branch in New Delhi
The Reserve Bank of India (RBI) superseded troubled private sector lender Yes Bank's board with immediate effect from on March 5.
The central bank has also appointed former State Bank of India (SBI) CFO Prashant Kumar as the bank administrator. For customers especially, this is the second instance where the RBI had to supersede the board (after Punjab and Maharashtra Cooperative Bank).
It has also imposed a moratorium on the private lender till April 3, 2020, limiting deposit withdrawals to Rs 50,000 per customer.
In a press release, RBI said the financial position of Yes 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 recent years, which have led to a steady decline of the bank, it added.
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Granted banking licence in 2003-04 along with Kotak Mahindra Bank. Yes Bank was headed by veteran banker Rana Kapoor. Kapoor owned 26 percent stake in the bank while Rabobank held 20 percent stake.
The bank emerged at a time when customers had limited options – state-owned public sector banks and a few old generation private banks. In the next 10 years, Yes Bank rose to be among India’s top five private banks’ and was viewed favourably by analysts and experts.
Here is a timeline of how the events went down:
August 30, 2018: RBI green lights Rana Kapoor continuing as MD and CEO of Yes Bank.
September 25, 2018: Yes Bank board seeks extension of Kapoor’s term till April 2019. Says it will form a committee to find a successor.
October 11, 2018: Korn Ferry advisory appointed to search for new CEO.
October 17, 2018: Kapoor’s term extension denied by RBI. Board is given time till February 2019 to find a successor. Bank responds with a commitment to finish recruitment by mid-December.
November 14, 2018: Board member Ashok Chawla and independent director Vasant Gujarathi resign.
November 27, 2018: Moody’s downgrades Yes Bank. Cites resignations and boards’ concern over corporate governance as reasons.
November 28, 2018: Reports emerge about Kapoor’s transactions through investment vehicles being under regulator lens. Bank denies involvement management of these vehicles.
March 1, 2019: Ravneet Gill appointed MD and CEO.
April 1, 2019: Securities and Exchange Board of India (SEBI) reportedly starts probe over potential insider trading. Rumours of top management revamp under Gill gain steam
July 18, 2019: Kapoor pledges entire stake in the bank.
September 21, 2019: Kapoor sells 2.75 percent stake through the open market, reduces equity to 6.89 percent.Disclaimer: The above report is compiled from information available on public platforms.