Yes Bank begins process to form alternate board

Returning to profit in FY22 after witnessing heavy losses for two consecutive years, Yes Bank has kicked off the process of forming an alternate board as it has come out of the reconstruction scheme.

The central government notified the Yes Bank Reconstruction Scheme on March 13, 2020, after the private lender faced a governance crisis triggered by mismanagement at the top level.

The reconstruction scheme helped the bank in achieving significant progress in record time and the turnaround with FY22 as the full-year profit for the bank at Rs 1,066 crore. The bank posted heavy losses in FY20 and FY21.

Based on the recommendation received from SBI -- the largest shareholder of the bank -- the board has now initiated the process of forming the alternate board, Yes Bank said in a regulatory filing on Wednesday.

''As a first step, the board has recommended to the shareholders the appointment of directors as recommended by SBI on the alternate board. The shareholders' meeting (annual general meeting) is scheduled on Friday, July 15, 2022, to consider the relevant resolutions,'' it said.

Since the implementation of the reconstruction scheme, the bank undertook multiple transformational initiatives that helped in resurrecting and rebuilding its foundation. The bank now remains on course to achieve its growth and profitability objective, the private sector lender said.

Yes, Bank said the alternate board will operate under the applicable laws and regulations as against the current board which was constituted and is functioning under the ambit of the reconstruction scheme.

The nine-member board to be formed would comprise current MD & CEO Prashant Kumar, Atul Malik, Rekha Murthy, Sharad Sharma, Nandita Gurjar, Sanjay Kumar Khemani, Sadashiv Srinivas Rao, T Keshav Kumar, and Sandeep Tewari.

The existing board of the bank has four directors, including MD & CEO Prashant Kumar and chairman Sunil Mehta, besides Mahesh Krishnamurti and Atul Bheda.

Also, it has two SBI nominee directors (officers of SBI) and two RBI-appointed additional directors.

The term of two additional directors -- R Gandhi and Ananth Narayan Gopalakrishnan -- appointed by RBI is valid up to March 23, 2023, or till further orders, whichever is earlier.

Sunil Mehta, Chairman, Mahesh Krishnamurti, and Atul Bheda – board members appointed under the notification of the reconstruction scheme, will hand over the charge to the alternate board having overseen the significant turnaround of the bank in record time and having achieved the primary purpose for which they were mandated under the Yes Bank Reconstruction Scheme, 2020, Yes Bank said.

''The bank's largest shareholder State Bank of India has proposed Prashant Kumar's candidature for the position of MD & CEO of the bank for three years, which will be subject to the approval of the alternate board, Reserve Bank of India, and the shareholders,'' it added.

The bank had to be bailed out in March 2020 after a prompt intervention by the government and RBI, wherein several peer banks stepped in to infuse capital in Yes Bank instead of stakeholding.

Prashant Kumar from SBI was appointed as the administrator under the watch of RBI and later positioned as the MD & CEO.

Yes, Bank said it achieved key milestones since the implementation of the reconstruction scheme, including a full-year profit in FY22; nearly doubling of deposit book from Rs 1.05 lakh crore to Rs 1.97 lakh crore (March 2022), an increase in retail/MSME share in the balance sheet to 60 percent from 44 percent and reaching a CASA of over 30 percent.

It also raised Rs 15,000 crore equity capital in July 2020 through one of the largest public issues and improved the CET1 ratio to 11.6 percent from 6.3 percent.

Yes, Bank said the focus has moved from the consolidation of the balance sheet to growth. In FY22, the bank's loan book grew by nearly 9 percent with gross disbursements of about Rs 70,000 crore across all segments.

''Bank has undertaken multiple initiatives to review and make necessary changes to its governance frameworks and processes with a key focus on the credit underwriting policies and practices,'' it said.

It maintained leadership in digital payments with the highest market share in UPI as one of every third digital transaction is processed by Yes Bank infrastructure. ''Yes Bank today accomplishes a significant milestone of coming out of the reconstruction scheme by initiating the process of formation of the alternate Board,'' Mehta, chairman of the board, said.

He complimented his colleagues on the board, the Reserve Bank of India, the government of India, State Bank of India, and all other investors as well as the bank's customers and the 24,000-plus highly dedicated employees of the bank for the historic turnaround of one of the largest private sector banks of this country.

''It has been a fascinating experience and truly a privilege to lead the board during this very difficult period and achieve very distinct milestones over more than two years. My special gratitude to Mahesh Krishnamurti and Atul Bheda who will be demitting office along with me on the formation of the alternate board,'' Mehta said.