Yes Bank's recent exits are linked to the board members' differences with the current CEO Rana Kapoor "over the recent events at the bank", multiple sources familiar with the matter told CNBC-TV18 on Tuesday.
Country's fourth largest private lender, in a late night release to exchanges, said that R Chandrashekhar, its non-executive independent board member, had tendered his resignation from the bank due to "personal reasons". This marked the third exit from the board of Yes Bank in less than a week.
On November 14, Ashok Chawla and Vasant Gujarathi had resigned from the board of the bank but no explanation was officially communicated to the exchanges about the reason behind the exit.
R Chandrashekhar, in his resignation letter, is understood to have expressed deep concerns about the recent developments and dismay at the manner in which the bank dealt with them. He is understood to have conveyed to the bank that the environment was not conducive to him staying on.
What are these concerns?
According to sources, there has been friction between Rana Kapoor and some of the board members since RBI sent a letter to the bank cutting short the tenure of the former, asking him to leave the bank he co-founded.
There have been differences between the board members and Kapoor on matters relating to the transition and the process of selecting the new CEO, the sources told. The bank had sought an extension for Kapoor. However, the Reserve Bank of India had refused to grant the same.
CNBC-TV18 had reported earlier that Ashok Chawla had resigned over differences with Rana Kapoor as the latter felt that the former had not adequately supported him when RBI cut short his tenure.
Sources added that the circumstances in which both Ashok Chawla and Vasant Gujarathi left the bank worried R Chandrashekhar and what added to the worry was OP Bhatt’s resignation from the Search and Selection Committee.
But the biggest concern for him yet was the independence of the board under the existing leadership, which is linked to the spate of exits from the board, a source added.
Meanwhile, Kapoor wrote to R Chandrashekhar asking him to reconsider his decision and at least serve until April 2019 in the interest of the bank and also to avoid any adverse market impact. However, Chandrashekhar declined the request and resigned.
Whereas sources within Yes Bank have a different story to tell. According to them, while the exit of Ashok Chawla was linked to questions on his “fit and proper” criteria after being named in the CBI chargesheet in the Aircel-Maxis case, Vasant Gujarathi’s exit as the head of audit committee was also to do with the bank’s two consecutive years of divergence reporting.
A bank official, on the condition of anonymity, said that R Chandrashekhar’s resignation followed the bank’s Nomination and Remuneration Committee looking at a complete overhaul of the board, before the new CEO comes in February. The official said that the NRC would be reviewing the performance of each of the board members in the coming days.
When contacted by CNBC-TV18, R Chandrashekhar said, “The reasons for my resignation have been stated in my resignation letter and I have nothing further to add.”
The bank said it did not have any further comments on the matter, besides what has already been disclosed to the exchanges.