New Delhi - The Reserve Bank has curtailed the term of Yes Bank's founding CEO Rana Kapoor and asked the private sector lender to look for his replacement by January 2019.
Kapoor, who has been managing director and CEO since the bank's inception in 2004, had sought a three-year extension till August 31, 2021. However, the sector regulator did not agree to the request and permitted him to continue only till January 2019.
"Reserve Bank of India has vide letter dated September 17, 2018 received today, intimated that Shri Rana Kapoor may continue as the MD & CEO till 31 January 2019, and the Board of Directors of the Bank are scheduled to meet on September 25, 2018 to decide on the future course of action," the bank said in a statement.
In June this year, Yes Bank's shareholders had approved the re-appointment of Kapoor for three years, subject to final approval from the Reserve Bank of India (RBI).
His present term ended on August 31. However, the RBI had allowed him to continue till further notice.
RBI approved the reappointment of Rana Kapoor as MD and CEO of Yes Bank on August 30, 2018 but did not specify the period.
Earlier this year, RBI denied a three-year extension to Axis Bank CEO Shikha Sharma despite the board endorsing her reappointment.
Kapoor was part of the founding team of Yes Bank, along with Ashok Kapur who died in 2008. As a promoter, Kapoor and his family own 10.66% stake in the bank.
The banking sector has seen increased regulatory scrutiny over the last two years as the RBI has tried to push for appropriate recognition of bad loans.
The asset quality review initiated in December 2015 has led to banks recognising an additional Rs 6 lakh crore as bad loans.
Banks were asked to disclose 'divergences' in bad loan reporting. As a result, the RBI judged gross NPAs at Rs 8,373.8 crore for Yes Bank for 2016-17 against the declared gross NPAs at Rs 2,018 crore. Thus, there was a divergence of Rs 6,355 crore or three times the reported amount.
Shares of the bank closed at Rs 318.50, down 1.44% per unit on the BSE.