YES Bank awaits RBI's nod for re-appointment of Rana Kapoor as CEO, stock closes lower
BusinessToday.In August 30, 2018
Private sector lender YES Bank is yet to inform investors about the final stance taken by sector regulator Reserve Bank of India on the reappointment of its CEO Rana Kapoor whose term ends on August 31, 2018.
Reacting to the uncertainty, the YES Bank stock closed 1.12% lower to 361.90 level on BSE today. The stock has been losing for the last three days and lost 5.78% during the same period. It touched an intra day low of 358.20 in trade today.
In June, the board of country's fourth largest public sector bank decided to reappoint Kapoor who is also founder of the Mumbai-based bank as managing director and CEO for a period of three years. The board also managed to secure shareholders' approval for the same.
The appointment was still subject to approval of the RBI which recently turned tough on the management of lenders for issues related to appropriate recognition of bad loans.
With just one more day left for the term of current CEO, the bank has not informed stock exchanges about any communication received from RBI on the re-appointment of its CEO.
Kapoor has been the bank's CEO since 2003 and holds 10.66% stake in the lender along with his family.
Exact reasons for the pending approval from the RBI are still unknown but of late, the apex bank has gone tough on lenders for rise in bad loans and divergences in the reported figures.
YES Bank reported gross NPAs for FY17 at Rs 2,018 crore. However, gross NPAs of the private sector lender were estimated to be Rs 8,373.8 crore by the central bank. The resulting divergence was nearly three times the reported amount.
Another private sector lender came under the RBI scanner for misreporting bad loans.
Earlier this year, Axis Bank CEO Shikha Sharma cut short her tenure to December 2018.
The board had extended Sharma's tenure for the fourth time which would have ended in 2021. However, the RBI reportedly expressed displeasure at the board's decision clearing another three-year term of the CEO amid surge in bad loans.
The apex bank was alarmed over a high level of divergence between bad loans reported by the bank and those discovered by the RBI.
Over the last two years, the bank came under greater scrutiny of the regulator for misreporting bad loans. After conducting its annual risk-based supervision, RBI said the bank underreported bad assets worth Rs 9,480 crore in FY16 and Rs 5,633 crore in FY'17.