Yes Bank announced the appointment on Friday of former deputy governor of the Reserve Bank of India, R Gandhi, on the board is directed at establishing the bank.
In an intimation to stock exchanges, the private sector bank also told the appointment was in the valid interest of all stakeholders.
The notice added, “This is a very positive and constructive measure aimed at further strengthening the Board. This will not impede the smooth, independent and effective functioning of the bank in any way. The RBI is supportive of a strong and successful Yes Bank and we stand committed to serving the best interests of all our stakeholders.”
After RBI designated Gandhi under sub-section (1) of Section 36 AB of the Banking Regulation Act, which allows the regulator to designate additional directors in the concern of the bank or its clients, such appointments are made by the RBI to secure close guidance on a bank.
After its founder, Rana Kapoor was forced to step down as managing director and chief executive officer by 31 January 2019, Yes Bank had seen an administration instability.
Kapoor was succeeded by Ravneet Gill, former India CEO of Deutsche Bank on 1 March.
“While there are problems in the bank and the balance sheet looks stressed with the capital position being weak, the move by the RBI could be a precautionary move as Yes Bank is much larger than banks such as Dhanlaxmi Bank or Lakshmi Vilas Bank and any failure here could have serious systemic implications.
Hence the RBI could be cautious and pre-emptive here,” according to Suresh Ganapathy, analyst, Macquarie Capital.Share this to your,