The Smarter way to get your business news - Subscribe to BloombergQuint on WhatsApp
It was clear in November itself that R Chandrashekhar’s exit from the Yes Bank Ltd. board was no ordinary exit. Most independent directors cite shortage of time, other commitments or such generic reasons for stepping down even when the real reasons may be quite different.
But Chandrashekhar, in a comment to Bloomberg soon after he stepped down as an independent director on Nov. 19, said, “I wasn’t happy with the developments taking place in the recent past and the way it was handled.”
BloombergQuint now has a copy of the full resignation letter and it doesn’t paint a pretty picture of the events that preceded the veteran bureaucrat’s resignation.
"...I have been deeply concerned about recent developments at Yes bank and dismayed at the manner in which they have been dealt with. It is even more distressing that all this should have occurred during a critical transition period when tact, wisdom and purposeful, well considered actions were called for." - R Chandrashekhar’s Resignation Letter - MCA website
Chandrashekhar joined the Yes Bank board in April this year. The Indian Administrative Services officer has served as information technology and telecommunications secretary to the union government. He was also once the chairman of Nasscom, the IT industry body.
He joined the Yes Bank board “attracted by the vision of a digital first, new age bank” and the task of helping steer this vision as the an independent director and chairman of the IT Strategy Committee, his resignation letter said.
Appointed for a five-year term, Chandrashekhar’s exit in seven months is an alarming turn of events. Though it’s thin on specifics, the letter makes clear his dissatisfaction with the running of the board and the bank.
"I find that the resultant situation arising from recent developments and their handling is not conducive to the discharge of my duties as an independent director and chairman of the IT Strategy Committee. Consequently, I tender my resignation as independent director with immediate effect." - R Chandrashekhar’s Resignation Letter - MCA website
Chandrashekhar’s candour seems to have caught Yes Bank on the backfoot. It had first informed the stock exchanges that Chandrashekhar stepped down due to personal reasons. That statement was revised later to mention just the resignation and offered no reason for it.
When the Bombay Stock Exchange queried Yes Bank on news reports suggesting Chandrashekhar stepped down due to governance issues, the bank informed the stock exchange that it had made relevant disclosures regarding the director’s resignation and that it did not comment on media speculation.
Churn At Yes Bank
Five days before Chandrashekhar stepped down, two other independent directors did the same. One of them was the chairman of the board, also a veteran bureaucrat and a former regulator .
Ashok Chawla was appointed as independent director for a five -year term in March 2016 and then appointed non-executive part-time chairman for a three year period starting October 2016. He had a year to go as chairman and three as independent director when he stepped down.
During his time as chairman Yes Bank faced flak for two big reasons—NPA divergence issue and Rana Kapoor’s leadership.
In October, RBI refused to extend the term of Rana Kapoor, the bank’s co-founder and its managing director and chief executive officer.
Chawla’s resignation letter said he was stepping down because the bank was going through an “organisational transition” and required somebody “who would be able to devote more time and attention to lead it through this critical phase”.
Recently, his name cropped up in a chargesheet filed by the Central Bureau of Investigation alleging wrongdoing in the purchase of shares in Aircel by Malaysian telecom major Maxis.
Curiously, on the same day as Chawla’s resignation, another independent director on the Yes Bank board stepped down. Vasant Gujarathi, chartered accountant and former PWC partner, was appointed to the board in April 2014 and headed the bank’s audit committee.
He resigned on Nov. 14 with immediate effect, five months before his term would have ended.
"Due to my personal and other professional commitments, I am not in a position to devote time as a director on the Yes Bank board. Hence I am submitting my resignation with immediate effect." - Vasant Gujarathi’s Resignation Letter - MCA website
He continues as director in Yes Bank Securities Ltd.
On Nov. 15, OP Bhatt, a former chairman of State Bank of India, stepped down as external expert on the Search and Selection Committee, appointed to find Kapoor’s successor, with immediate effect “citing that there may be a potential conflict of interest”.
The committee was constituted on Oct. 5, on the recommendation of the bank’s Nominations and Remuneration Committee. The other external member appointed was former LIC and IRDAI chairman TS Vijayan.
Curiously, Vijayan has now been appointed as a director on the Yes Bank board. That indicates there are no external members on the Search and Selection Committee. In effect, it now mirrors the NRC.
. Read more on Business News by BloombergQuint.