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Yes Bank managing director Rana Kapoor's continuation as a director on the board of the Mumbai-
headquartered lender could face hurdles post January 31, 2019, if a crucial provision of the Banking Regulations Act dealing with the composition of the board of directors gets triggered, legal sources told ET NOW.
“If section 10A2A (ii) of the Banking Regulations Act gets triggered based on legal opinion received by Yes Bank, then Rana Kapoor’s term as a director on the bank’s board may also come under scrutiny and may not be extended beyond January 31, 2019,” said a source requesting anonymity.
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“In his existing capacity as an MD CEO, he also serves as a whole-time director of Yes Bank and this section deals with the removal of whole-time directors of a banking company and a bar on them continuing as a director and being appointed again for a specified period.
This will come into play if RBI’s directive to the bank is legally interpreted as a removal under the current circumstances,” said the source.
According to Section 10A2A(ii), “a chairman or other wholetime director of a banking company who has been removed from office as such chairman, or whole-time director, as the case may be, under the provisions of this Act shall also cease to be a director of the banking company and shall also not be eligible to be appointed as a director of such banking company, whether by election or co-option or otherwise, for a period of four years from the date of his ceasing to be the chairman or whole-time director as the case may be."
In an official announcement to the stock exchanges on September 19, Yes Bank said, “the Reserve Bank of India has vide letter dated September 17, 2018, received today, intimated that Shri Rana Kapoor may continue as the MD CEO till January 31, 2019, and the board of directors of the bank are scheduled to meet on September 25, 2018 to decide on the future course of action.” An email query sent to Yes Bank remained unanswered at the time of going to press.
