Yes Bank shares down 10% as RBI mulls extension of Rana Kapoor term

Yes Bank is in need of a new chief, however, the time given for finding a new leader is considered very short, which is why, it is desperately looking at extending founder Rana Kapoor’s exit deadline. The bank is waiting with bated breath even as RBI mulls next step. Just like the bank, even investors are in panic mode, hence removing their money from Yes Bank stock. On BSE today, Yes Bank was the worst performer with high margins. So far, in today’s trading session, the bank tumbled by nearly 10% with intraday low of Rs 202 per piece. After market hours, the bank ended at Rs 203.20 per piece down by Rs 20.45 or 9.14%. 

On September 25, Yes Bank held for board meeting in deciding their future course. The bank arrived at three key decisions and is now in need of RBI’s approval. 

Firstly, it has set up a Search & Selection Committee comprising of three existing nomination and remuneration committee board members plus two external experts to identify a new Managing Director & CEO as a successor to Rana Kapoor. 

However, the bank also expressed the challenges in searching a new MD & CEO in less than four months time. Therefore, they are now knocking RBI’s door for extending Kapoor’s exit deadline. 

Yes Bank in a statement said, “The board also decided that given the role of Rana Kapoor as MD&CEO since inception of the bank in 2004, and the time consuming challenges of finding a suitable successor, that the incumbent MD&CEO be given further time in his current position beyond January 31, 2019.”

It added, “Accordingly, it was decided that RBI be requested for an extension upto minimum April 30, 2019, for finalization of audited financial statements for fiscal year ending 2019, thereafter subject to RBI approval up to September 30, 2019.”

While Yes Bank waits for further clarity from RBI, to further ensure long term succession plan within the bank, they have decided to appoint two senior leaders as Executive Directors.  This is also subject to RBI approval. 

These two names are Rajat Monga currently senior Group President and Pralay Mondal serving with same tag. 

Now the request has been made, Yes Bank is in urgent need of saviour. However, both experts and investors do not have faith that RBI will give what Yes Bank wants - there was no reason mentioned as to why RBI shockingly decided to end Rana Kapoor's tenure at Yes Bank by end of January 2019. However, analysts have said that the NPA divergence reported by Yes Bank was key for the reshuffle of management order. RBI has no tolerance for misconduct of business, and that is why, it has firmly given a fixed deadline. 

There are only three days left, and Yes Bank’s fate is now in the hands of RBI.