Yes Bank's Ravneet Gill needs to set house in order and deliver on his promise to gain market's trust

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26 Aug, 2025 12:21

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Yes Bank’s troubles seem to be far from over. Just when things seemed to fall in line gradually with the private lender after a tumultuous phase following founder Rana Kapoor’s exit, allegations of serious corporate governance issues, and delayed fund raising, fresh problems are cropping up for the Mumbai-based lender.

In the latest round, Yes Bank's independent director Uttam Prakash Agarwal has put in his papers citing "serious concerns" on the state of affairs at the private sector lender and deteriorating practices. Agarwal was also Chairman of audit committee for the bank. Shares of the private lender fell by five percent on January 10 following Agarwal’s exit.

What’s cooking at the bank?

Analysts are not sure what exactly caused Agarwal’s sudden exit. “There are reports suggesting both corporate governance issues and non-adherence to fit and proper criteria as reasons for Uttam Agarwal’s exit. This will partly affect the fundraising and the bank overall,” said Pritesh Bumb, Equity Research Analyst at Prabhudas Lilladher.

In November last year, Mint had reported that the Reserve Bank of India has asked Yes Bank to review the "fit and proper" status of Agarwal after the central bank noticed inadequate disclosures by Agarwal on the criminal cases filed against him.

In a clarification to the stock exchanges on January 10, Yes bank said Agarwal resigned ahead of the board examining his 'fit and proper criteria' under RBI's norms.

Regardless of the reasons behind Agarwal’s exit, it becomes abundantly clear that Yes bank isn’t out of its corporate governance problems, and there is more than meets the eye. “There are issues with the company. That has been the case for quite some time,” said Suresh Ganapathy, Banking Analyst at Macquarie Capital Securities (India). “The bigger problem is the asset quality issues in the bank and perhaps the books are not clean. There is not much transparency with respect to the asset quality,” said Ganapathy.

Broken promises?

Cracks first appeared on the books of the bank when the RBI found huge divergence in bad loan figures reported by the bank and what came up in the RBI’s inspection. In FY19 alone, Yes bank reported a divergence of Rs 3,277 crore in bad loans and Rs 978 crore in non performing asset (NPA) provisions. The bank has been struggling to raise funds despite repeated commitments made by Ravneet Gill, Managing Director and CEO of the bank to the shareholders. According to analysts, the lack of transparency within the top brass of the bank about the exact nature of fund raising plans and state of asset quality might have lead to Agarwal’s exit.

In his interviews to television channels, Agarwal had made it clear that he had expressed his dissent to the board of directors of the bank multiple times on the way things are moving in the company, and alleged that the bank is largely driven by the management, and not by the board.

Agarwal’s exit will be another blow to the shareholders' confidence in the new age private sector bank that, till the exit of its founder, was a model for exceptional growth for the banking sector. Investors will also be wary to put their money in the Mumbai-based bank till it can come clean on corporate governance issues, and the lack of transparency in communications.

After equating his holding in the bank to "Diamonds that are forever", in November last year, Yes Bank's founder Rana Kapoor sold almost all of his stake in the bank. The new regime, under CEO Ravneet Gill, promised to take the bank out of its corporate governance mess and asset quality issues, and attract new investors, but he has been unsuccessful to get an investor so far. Unless Yes bank manages to get an investor to put money on the table, there is any relief unlikely for the lender. Gill needs to set the house in order and promise only what he could deliver to shareholders.