InvestorQ : What does the resignation of Mr. Uttam Agarwal mean for the future of Yes Bank?
sara Kunju made post

What does the resignation of Mr. Uttam Agarwal mean for the future of Yes Bank?

1 year ago

The chairman of the audit committee of Yes Bank, Uttam Prakash Agarwal, had resigned citing major corporate governance concerns and that has triggered a minor crisis of sorts at the bank, which is already under pressure. That is a key item on the agenda of board meeting since Agarwal had cited concerns regarding corporate governance and management practices. Yes Bank has also informed that the RBI had asked Yes Bank to re-examine the “fit and proper" status of Agarwal after he failed to disclose details of criminal cases filed against him. This came in the wake of a whistleblower complaint.

But that may be more of a minor irritant in the entire episode and the real focus is on what Agarwal has cited as the lapses. According to Agarwal, there were serious concerns regards deteriorating standards of corporate governance, failure of compliance, management practices and the manner in which state of affairs of the company were being conducted by Ravneet Gill. Capital raising remains crucial to the bank. In an interview with CNBC-TV18 on Friday, the audit committee chairman said the management of Yes Bank had failed to disclose the identity of investors and the binding agreement to the board. Apparently, Agarwal had expressed these concerns twice to the board of Yes Bank but there had been no response to that effect.

It is capital raising which remains the big sticky issue for the bank. For example, the board of Yes Bank approved raising Rs.10,000 crore in one or more tranches through a qualified institutional placement (QIP), but no details were proffered. The statement that a number of investors had shown interest in buying Yes Bank equities worth $2 billion was substantially vague and ambiguous. Till date, the bank has disclosed that it was in discussions with the family office of Erwin Singh Braich / SPGP Holdings and the investors had shown an interest in investing $1.2 billion through a binding offer. Citax Investment Group had also committed an investment of $500 million. According to latest updates, the bank has rejected the offer from Erwin Singh Braich / SPGP Holdings but is favourably considering the offer from Citax. The bottom line is that the core equity of Yes Bank is down to just 8.5% against the statutory requirement of 8% and time may be running out for Yes Bank.