Later on, Rana is said to have shared a draft proposal that asked him to be made non-executive chairman and for Shagun to be kept away from the board. But this was unacceptable to the Kapur family. They wanted one director to be nominated by each family, while the third one would be on a rotation basis. Between November and December, negotiations were held between Madhu Kapur’s family and three members of the YES Bank board —Subhash Kalia, Ajai Kumar and Lt Gen. (Dr) Mukesh Sabharwal (retd).
In lieu of this, as Rana was staging a backdoor comeback at YES Bank, he offered Shagun directorship at YES Securities—an arm of the bank. ‘I will mentor you there,’ Rana is said to have told Shagun. But this time the Kapurs were adamant. They knew, like last time, that Rana was hiding behind the board. As his days neared an end, Rana became more and more desperate. In fact, the once-arrogant Rana was even apologizing to the Kapurs.
Around Republic Day in 2019, with only four days to go till he was CEO and MD, Rana made a last bid to amke a comeback. He visited Madhu Kapur at her home for the first time in almost a decade. There, he tried to get emotional to convince Madhu, but to no avail. ‘What will we be giving our grandchildren?’ he asked her. But Madhu was in no mood to budge.
That is when a breakthrough was achieved, exactly after a decade of tussle. It was agreed that Rana won’t come on board, while both families would nominate one person each, and the third seat would remain empty for now. It was because of this deal that in April 2019 Ravinder Kumar Khanna and Shagun Gogia Kapur were appointed on the board as ‘Indian Partners Representative Director on the Board of the Bank pursuant to Article 110(b) of the Articles of Association.’
Now who was Ravinder Kumar Khanna? He is the father of Aditya Khanna and father-in-law of Radha Kapoor—Rana’s eldest daughter.
But Rana didn’t stop with the January agreement. He continued writing to the board until April, telling them how to do the things required to get him appointed as an adviser. It was only after an intervention by Rama Subramaniam Gandhi, former RBI deputy governor and nominee director on the YES Bank board, that Rana stopped directly interfering in issues relating to the bank.
As the RBI was fighting a battle to clean up the Indian banking system, it was fighting a simultaneous war—a bigger one. It was fighting over the control of the Reserve Bank with the finance ministry led by Late Arun Jaitley—one of the ugliest turf wars fought between the central bank and the government.
This ugly spat became public on 26 October 2018, when then deputy governor Viral Acharya, speaking at the A.D. Shroff Memorial Lecture in Mumbai, warned the government of the day about the wrath of the markets for not respecting institutions. In the footnotes, Acharya thanked Urjit Patel for suggesting the topic to him. What followed for the next one and a half months were plants and counter-plants by both parties as the game for one-upmanship was fought publicly. On 7 November, after a lot of investigation into this turf war, we at Deccan Herald had reported that the government was looking to use one-third of the RBI’s reserves to make up for its lack of revenues, and this was the primary reason for the turf war. Even as Jaitley and then Finance Secretary Subhash Chandra Garg vehemently denied the story, over the course of next one year, it was proven to be true.3 In August 2019, the RBI accepted the suggestions made by Bimal Jalan committee and transferred Rs 1.76 lakh crore to the Government of India—almost Rs 52,000 crore of which came from RBI reserves.
However, that wasn’t the only reason. Another big reason was the government’s position on RBI’s bank clean-up drive—that led to the axing of Rana Kapoor—which hampered the growth in the country as banks were not able to lend as freely as before.
As irony would have it, Urjit Patel made an unceremonious exit from the RBI before Rana Kapoor stepped down from YES Bank. But by that time, Urjit had sealed Rana’s fate and that of two other private lending chiefs—Shikha Sharma of Axis Bank and Chanda Kochhar of ICICI Bank. As the new governor took charge, the central bank started pushing for more and more lending, and the clean-up of balance sheets seemed took backstage. This brings the RBI’s role in handling the YES Bank fiasco under severe questioning.
Going by the schedule set by the RBI in September, YES Bank, on 24 January 2019, announced the appointment of Ravneet Gill as Rana Kapoor’s successor. However, he was supposed to join in March. Till then, YES Bank board member and former Syndicate Bank top boss, Ajai Kumar, was appointed as the bank’s interim boss. One of his friends later told me that Kumar wasn’t happy with the way things were at YES Bank. We will dwell more on the post-Rana phase of in later chapters, but for now let’s focus on how the RBI as a regulator could not insulate itself from the fall of YES Bank.
The government and the RBI may have found a suitor for YES Bank quickly after the crisis could no longer be ignored, but did that mean they, especially the banking regulator, acted in time? Hardly. If trust in the banking system has been broken due to the YES Bank fiasco, much of the blame lies with the regulator and
