We are watching Yes Bank boardroom war carefully, says RBI

Mumbai: The Reserve bank today said it is watching the ongoing boardroom battle at private lender Yes Bank and may make necessary changes in the required norms on appointment of directors on bank boards if needed.

“This boardroom battle which is going on (at Yes Bank), we are studying it and if we think that some measure needs to be taken on the issue, we will look into that,” said Deputy Governor in-Charge of Banking Supervision Anand Sinha during the customary post-policy interaction at the RBI headquarters.

He was talking against the backdrop of a legal case filed by Madhu Kapur, wife of Yes Bank’s deceased promoter Ashok Kapur, seeking a board seat for her daughter Shagun Gogia as a promoter nominee director, among others.

The application of Gogia was rejected by the bank board at its 27 June meeting, saying she did not meet the “fit and proper” criteria laid down by the RBI for appointing directors.

However, Gogia claimed that she met the necessary criteria and questioned as to why the bank board was not forwarding her application to the RBI to decide on merit.

“On the appointment of directors, the Banking Regulation Act does specify certain qualifications, while additionally, there are shareholder directives as well,” Sinha said.

To another question, Sinha said there was no prohibition on promoters from taking executive jobs in banks. Sinha informed that RBI has increased the age limit for board members to 70 and in the Yes Bank case, appointment of one of the directors has been cleared only for a year.

Two of the recently appointed directors of Yes Bank - MR Srinivasan and Diwan Arun Nanda - are above 69.

Without naming either of them, Sinha said, “There is an age limit of 70 and it is not very hard, but generally observed. When he was appointed, he was well short of 70. Some part of his term may go beyond 70, and (therefore) he has been given approval for only one year.”

Sinha also said he has read that the board seems to feel that the candidate is not of the same level as others. “That is their perception, and we don’t come into the way.”

PTI