Madhu Kapur, widow of YES Bank co-founder Ashok Kapur, and her two children – Shagun Kapur Gogia and Gaurav Kapur – have approached banking regulator Reserve Bank of India (RBI) accusing the private lender’s Managing Director and Chief Executive Officer Rana Kapoor of misusing his position.
The Kapur family claimed Rana Kapoor was using the bank’s resources to “directly and indirectly” deny them their right as co-promoter. Rana Kapoor had co-founded YES Bank with Ashok Kapur. Rana Kapoor’s wife, Bindu, and Madhu are sisters.
When contacted, YES Bank said in a statement, “The bank had in the past consistently maintained that as a matter of policy, it does not comment on matters pending before court, as the same has an effect of interfering with the administration of justice. Therefore, the bank is not commenting on the issues, except in terms that it reiterates its position as taken before the Hon’ble Bombay High Court. The same conclusively contest and rebuts the position placed by the Madhu Kapur. Hence, the allegations in this regard are strongly denied”.
Terming them defamatory allegations against the MD & CEO, the statement said, “The bank functions in a strongly-regulated sector, subject to the oversight of the Reserve Bank of India and the appointment of MD & CEO has been approved by RBI”.
“Any insinuation against the bank and its top management, at the behest of a motivated party, would be an attempt to leverage on the bank’s goodwill while defaming its name and goodwill,” the statement added.
Madhu and her children also requested the banking regulator not to permit selection of any person as chairman or managing director of YES Bank, unless the appointment is jointly recommended by the Rana Kapoor and the Kapur family.
“Mr Rana Kapoor is misusing his position as managing director of the bank. The resources of the bank are being used by Mr Rana Kapoor to directly and indirectly deny us our rights, including by using the bank and independent directors as a front to raise untenable preliminary objections…In view of the above, you are requested to give no approval to the appointment of any person as chairman or managing director of the bank, unless it is jointly recommended by Mr Rana Kapoor and is according to the articles of association,” Madhu Kapur and her children wrote in a letter addressed to one of the RBI deputy governors.
Business Standard has reviewed the contents of the letter. The post of YES Bank’s chairman and managing director will become vacant in June and August. While Rana Kapoor is the managing director, M R Srinivasan has been made the part-time chairman of the bank.
“You are requested, as the regulator of banks, to ensure that ethical and governance standards are duly maintained. You are also requested to ensure that the appointments made have due approval of the shareholders unlike in the case of the appointment of Mr Srinivasan as part-time chairman, with remuneration that was not even approved by the shareholders of the bank,” the Kapur family said. “Considering the circumstances, you are requested to give us opportunity to place before you material to show that Mr Rana Kapoor has not acted in the interest of the bank or in a manner befitting the position of a managing director of a public trust institution.”
YES Bank has so far maintained its stance of not considering Madhu Kapur as a co-promoter. The bank’s board at its last meeting did not change this stand reducing the scope for an out-of-court settlement.
YES Bank claims that banking is not a family business and “financial family successors” do not automatically become part of the promoter group of a bank due to regulatory criteria.
The Bombay High Court has adjourned the hearing on the dispute between Madhu Kapur and YES Bank until June 19, 2014.