Yes Bank on Friday said an independent director has resigned and it has curtailed its fund-raising plan.
Uttam Prakash Agarwal, the independent director, on Friday resigned from the board and stepped down as head of its audit committee citing corporate governance concerns.
While the Yes Bank’s board will examine the matters raised by Agarwal, the lender said that Agarwal was facing a “fit and proper” status review as directed by the RBI.
The resignation of Agarwal was not the only bad news for Yes Bank shareholders. The lender had to trim its capital raising plan too.
Yes Bank had earlier announced that it intends to mobilise $2 billion. After a board meeting on Friday, the bank said its directors had approved a fresh round of capital raising of Rs 10,000 crore (around $1.4 billion), for which shareholders’ sanction will be sought soon. It also announced that Canadian investor Erwin Singh Braich’s $1.2-billion offer will not be pursued further. The lender also hinted at hiccups with regard to the $500-million offer made by Citax Holdings and Citax Investment Group.
Agarwal, a chartered accountant who had joined the board in November, quit citing “deteriorating standards of the corporate governance” under CEO Ravneet Gill.
Agarwal’s resignation letter shared by the bank said he had “serious concerns” about the “deteriorating standards of corporate governance, failure of compliance, management practices and the manner in which the state of affairs are being conducted by the bank under Gill”.
Yes Bank said the observations made by Agarwal on the bank’s governance will be duly examined by the board.
Agarwal also named Rajiv Uberoi, senior group president for governance, and legal head Sanjay Nambiar in the letter, and claimed that he had raised similar concerns in earlier correspondence.
In a letter written on Friday to Sebi, Agarwal listed out his concerns on non-disclosure and reluctance shown by Gill in informing the board of the names of the interested investors in the fundraising exercise . He also said Citax Investment, whose proposal to invest $500 million is being considered by the board, had a very low paid-up capital.
He alleged that Gill had to be reminded repeatedly for sharing information on the capital-raising plans, and the term sheets he eventually shared lacked essential details, and that expression of interest submitted by three domestic investors were called as commitments.