Rentala Chandrashekhar, who was appointed as independent director just seven months ago, is the third director to have resigned from the board of Yes Bank in the past few weeks. While the Bank, in its revised regulatory filing, has not given any reason for the resignation, according to media reports, Mr Chandrashekhar was concerned and dismayed at the manner in which recent developments, especially on corporate governance, were dealt with by the lender.
Last week, Ashok Chawla, who was non-executive chairman of Yes Bank, resigned, saying he would not be able to devote adequate time to the Bank in the run up to appointing a new CEO. At that time, it was speculated that his exit was triggered by his name being mentioned in the charge sheet filed by Central Bureau of Investigation (CBI) in the Aircel-Maxis case.’
Earlier Rana Kapoor, managing director (MD) and chief executive (CEO) of Yes Bank was denied an extension by the Reserve Bank of India. The central bank had asked the lender to find a replacement to Mr Kapoor by 31 January 2019.
According to reports, the RBI has found corporate governance issues and under-reporting of non-performing assets, which has led to a series of negative developments in the private sector lender's functioning in the recent past.
Vasant Gujarathi, another independent director, has also resigned from Yes Bank board.
Later OP Bhatt, former chairman of State Bank of India (SBI) and a member of Yes Bank's committee to find a successor to Mr Kapoor, also resigned.
The spate of resignations without a clear reasons for their exit, once again raises questions about the futility of the elaborate good governance rules and their many check-box declarations and evaluations.
When a situation as grave as the one at Yes Bank why is it met by complete silence from the market regulator, Securities & Exchange Board of India (SEBI) and the Ministry of Corporate Affairs. The rationale for high sitting fees and commissions offered to independent directors is linked to the expectation that they will ensure a strict oversight on management. The new rules also require independent director to give proper reasons for resigning from the board. But this is not happening. The reasons cited are paucity of time or health reasons.
A report from LiveMint
says, "Chandrasekhar, who joined the bank as an independent director in April, 2018, while tendering his resignation letter on Monday, indicated that he was not expecting such instability due to the series of resignations from the bank recently."
Quoting from this resignation letter, the report says, “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.”
Mr Chandrashekhar, the former chairman of Nasscom, was also telecom secretary. He had also quit from the information technology strategic committee of Yes Bank.
YES Bank's nomination and remuneration committee is reviewing the performance of the board members. The Committee is also looking for a replacement from IT and cyber security for Mr Chandrashekhar.
The bank currently has seven board members – Mr Kapoor, Lt General Mukesh Sabharwal, Brahm Dutt (former secretary), Subhash Kalia (former executive director of Union Bank and Vijaya Bank), Ajai Kumar (ex-CMD of Corporation Bank), Dr Pratima Sheorey (director of SCMHRD, Pune) and Uttam Prakash Agarwal (former president of ICAI).