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    3 reasons cited by RBI for sacking Rana Kapoor as CEO and now his board seat in jeopardy

    Synopsis

    The board of Yes Bank at its next meeting on September 25 is likely to seek a legal opinion on the issue.

    Yes Bank board likely to seek legal opinion on Rana Kapoor continuing as director
    The Modi Government is believed to be in favour of the Reserve Bank of India's decision to not let Rana Kapoor stay on as MD & CEO of Yes Bank, ET Now learns from sources. What's more, contrary to popular belief, the RBI in its official communication to the Yes Bank board did cite specific reasons for not letting Rana Kapoor continue in his current post beyond January 31, 2019.

    ET Now learns from informed sources the RBI cited as many as three reasons and they are: "Weak compliance culture in Yes Bank", "Weak Governance In Yes Bank" and "Wrong asset Qualification"

    And with these three missives from the RBI, the Yes Bank board finds itself in a quandary: Can founder and promoter Rana Kapoor stay on as a board member when the RBI has concluded he is not a fit CEO? ET Now learns the board at its next meeting on September 25 is likely to seek a legal opinion on just that.

    A closer reading of Yes Bank's Articles Of Association reveals Rana Kapoor under Article 121 cannot be retired from the Board. Also as per Artcle 110, Rana Kapoor has the right to nominate up to 3 directors, provided he secures the approval from his estranged sister-in-law Madhu Kapur for these appointments. Even though the Yes Bank Articles Of Association may seem to be in favour of Rana Kapoor, they are all subject to RBI approval. And sources say RBI is unlikely to allow him to continue on the Board.

    Rana Kapoor, meanwhile, is believed to be considering legal recourse and is in conversation with lawyers to move Court against RBI.

    Coming back to the upcoming Board Meeting, ET Now learns the pros and cons will be discussed of an internal vs external CEO, though prime facie an external candidate does seem like a more plausible choice. The Board is also expected to start moving forward on setting up a selection committee to find Yes Bank's next CEO and even appoint a head hunter for the same.


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    ( Originally published on Sep 21, 2018 )
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