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External probe reveals most allegations by former audit committee head unsubstantiated, says Yes Bank

The board has requested the firm for detailed recommendations highlighting areas where corporate governance can be further strengthened, the bank has said in the annual report.

August 19, 2020 / 11:38 AM IST
 
 
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An independent external firm that looked into allegations made by the former audit committee chairman of Yes Bank early this year has found most of the accusations to be unsubstantiated, the private lender has said in its 2019-20 annual report.

The board has requested the firm, which submitted a preliminary report, for recommendations highlighting areas where corporate governance can be further strengthened, the annual report said.

“In January 2020, the then chairman of the audit committee of the bank highlighted certain concerns around corporate governance and other operational matters at the bank. The then board decided to get this investigated by an independent external firm,” the report said.

"A preliminary report has been received by the board. While most of the allegations are unsubstantiated, the board has requested the external firm for detailed recommendations highlighting areas where corporate governance can be further strengthened.”

The report also said no offence of fraud was reported by the bank auditors.

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In January, Yes Bank’s audit committee chairman Uttam Agarwal resigned in a dramatic manner ahead of a crucial board meeting, making serious allegations about deteriorating corporate governance standards.

Agrawal had told Moneycontrol that he was unhappy with the way the private bank was dealing with capital raising. He also had reservations about appointments made by the new management.

Appointed on November 14, 2018, Agrawal's tenure was to run out in November 2023 but he resigned on January 10, 2020, the day the board was to decide on the bank’s capital-raising plans.

Later in the day, Yes Bank informed exchanges the board would also discuss Agarwal’s role after reviewing his "fit & proper" status under directions from the banking regulator.

“However, prior to the commencement of the proceedings of these meetings, the bank received the resignation of Agarwal,” Yes Bank said.

On March 13, the beleaguered lender was bailed out by a clutch of banks led by State Bank of India (SBI) after the government and Reserve Bank of India (RBI) drew up a bail-out scheme to avoid a collapse. Prashant Kumar, a former SBI official, was appointed the chief of the bank.

During the year ended March 31, 2020, the bank received various whistleblower complaints against the management, former MD & CEO and certain members of the board of directors prior to being superseded by RBI, the reports said.

“The NRC (nomination and remuneration committee), basis investigations conducted by the management has, post its review, concluded that they have no material impact on financial statements,” Yes Bank said in the annual report.

The bank's cofounder and former CEO, Rana Kapoor, was arrested on March 8 on charges of gross financial misconduct and a series of quid pro quo transactions.

A probe revealed that the Kapoor family was running a business empire involving more than 100 companies under three family holding companies. Kapoor influenced lending decisions of the bank’s credit committee for personal benefit, investigators found.

With the new management, Yes Bank is slowly inching back to normalcy. Its first-quarter numbers indicate improvement across key parameters and the worst seems to be behind.

The much-needed capital has finally come, deposits have grown on a quarter-on-quarter basis and asset quality remained stable in the June quarter.

Deposits at Rs 1,17,360 crores grew 11.4 percent in the quarter aided by 26.4 percent QoQ growth in current account deposits and 12.6 percent in term deposits. With this, the CASA ratio (cheaper deposits) is at 25.8 percent in Q1FY21.

Bad loan levels have stabilised with gross NPAs at June end as 17.3 percent, a tad higher than 16.8 percent in the previous quarter. In absolute terms, the GNPAs have declined to Rs 32,703 crore from Rs 32,878 crore in the previous quarter.

The bank has raised over Rs 14,000 crore in the follow-on public offer against a target of Rs 15000 crore. As on June 30, the Common Equity Tier-l ratio of the Bank was 6.5 percent and Tier l Ratio was 6.6 percent. Considering the capital infusion, proforma CETl ratio of the bank as on June 30, stands at 13.3 percent and total Capital Adequacy Ratio at 20 percent. These are all good signs.
Dinesh Unnikrishnan
Tags: #Yes Bank
first published: Aug 19, 2020 11:38 am

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