It was the high noon of liberalisation. The dismantling of the Licence Raj had unleashed a new wave of energy. Mumbai banker Rana Raj Kapoor was restless. Having worked with Bank of America for 15 years, the last two spent overseeing its lucrative wholesale banking business, Kapoor wanted to break out of the executive mould and turn entrepreneur.
In mid-1995, Kapoor, a Delhi University graduate with an MBA from Rutgers University, flew to the United States to make a presentation to the top brass of an American insurance giant. "My plan was to set up an NBFC, or a non-banking financial company, in India," he says. The insurer hinted it would be willing to take a majority stake in the proposed NBFC with a $5 million (Rs 22.5 crore) capital. On his return to India, an excited Kapoor shared his plan with his brother-in-law Ashok Kapur, then Country Head of ABN AMRO Bank. Though Kapur liked the plan, he felt the proposed NBFC would be too small. He convinced Kapoor to angle for a bigger NBFC, and introduced him to friends at the Dutch financial services player Rabobank NV.
Founder: Rana Kapoor, 53
Daughters: Raakhe works with YES Bank, Radha runs her own business, DoIt Creations, Roshini is studying
Why I did it: "I was very restless. I wanted to start something entrepreneurial."
Total turnover: Rs 2,369 crore in 2009/1
Soon Kapoor quit Bank of America and joined ANZ Grindlays Investment Bank as Country Head in India. During his two years at Grindlays, Kapoor held hush-hush meetings with Rabobank representatives. "Finally, we locked ourselves in a hotel room and hammered out an agreement," says Kapoor, recalling how he, Kapur and Harkirat Singh, former Country Head of Deutsche Bank, sealed the deal for a 25 per cent stake in an NBFC, Rabo India Finance, to be set up in partnership with Rabobank.
Even though the talks had coincided with the South-East Asian currency crisis of 1997, an undeterred Kapoor went ahead and set up the NBFC in early 1998. "I believe it is always a good idea to start in times of adversity," says Rana, adding: "It makes the entrepreneurial journey much more challenging."
The challenges did not end with the setting up of the NBFC. "I consumed whatever I had saved in my 17 years of service," he says. Initially, no money was coming in, and he had three young daughters to raise. By 2000, Kapoor had begun eyeing a banking licence. But he had trouble raising the seed capital for the bank. "We made the rounds of private equity funds to invest in our venture," he says. Then, barely a year after the Reserve Bank of India gave an "in principle" nod to their greenfield banking venture, YES Bank, one partner, Singh walked out, citing differences, in April 2003.
After the RBI granted a formal approval to YES Bank in 2004, the next big challenge was doing a successful initial public offering, or IPO, to raise funds from the market. Here, Kapoor succeeded beyond market expectations, with his bank netting Rs 315 crore with the issue oversubscribed 30 times. "The YES Bank brand was actually born with the IPO," says Kapoor, "We initially decided to do only corporate banking where we didn't need a branch network, as against retail banking," he says.
Today, YES Bank has revenues of Rs 2,369 crore and a market capitalisation of Rs 9,500 crore as of March 31 this year. But now Kapoor is working hard to build the bank's retail side as well. YES Bank currently has 185 retail branches across the country and is in the process of opening many more. "We are entering a new stratosphere," he says of the bank's transformation plan for the next five years after which he would like his bank's portfolio to consist of 40 per cent wholesale banking, 30 per cent mid-corporate commercial banking with small and medium enterprises, and retail banking accounting for the rest.
Meanwhile, the daughters had grown up. Raakhe, the second among them, joined YES Bank just before the IPO, and found it a great learning experience. An Economics graduate and MBA from Wharton Business School, Raakhe is currently Business Manager of Strategic Initiatives in the CEO's office. "I want to evolve as a financial entrepreneur," she says.
Eldest daughter Radha is an entrepreneur already, but has nothing to do with YES Bank. Her holding company, DoIt Creations, owns two operating companies, one for dry cleaning premium clothes and the other for creating interior and exterior arts in the commercial spaces. The youngest daughter, Roshini, is still studying.
Kapoor, however, has lost brother-in-law Kapur, who played a key role in building YES Bank and was formerly its Chairman. Kapur, who was dining in one of the restaurants at the Oberoi-Trident in Mumbai on November 26, 2008, was a victim of the terror attack that night.
Kapoor and his bank have won several awards over the past five years. The latest was from the Bombay Management Association in March which felicitated Kapoor as the entrepreneurial banker of the decade. He is perhaps the first Indian professional to have successfully set up a greenfield banking venture, which is now the fourth-largest private sector bank in India in terms of total assets.
What's next? "I want to give an institutional character to YES Bank," says Rana. That should not be difficult. Rana and his family are spreading their wings to emerge bigger and bigger in the decades to come.