Uttam Prakash Agarwal, independent director and chairman of the audit committee at YES Bank has resigned from his position, alleging corporate governance concerns about the bank’s fundraising exercise, CNBC-TV18 first reported on Friday morning.
The development was confirmed by Uttam Prakash Agarwal, who told CNBC-TV8 in an interview subsequently, “I have resigned on issues related to corporate governance at Yes Bank,” adding that Ravneet Gill, the managing director and chief executive officer of YES Bank, did not disclose the identity of the investors, and only verbally informed the board about execution of the binding term sheet.
He further said that YES Bank shared the names of Citax and SPGP Holdings only after “pressure from the board” to disclose names.
Agarwal was nominated to the board of the bank by its founder and former CEO, Rana Kapoor, months before his exit from the bank. A chartered accountant with 30 years of experience and a past-President of the Institute of Chartered Accountants of India (ICAI), Agarwal was appointed independent director on the board of YES Bank with effect from November 14, 2018, for a period of five years. His tenure was originally set to end in November of 2023 before he prematurely resigned today.
However, top executives with the bank had a different story to tell. A board member told CNBC-TV18 on the condition of anonymity that Agarwal was seen as “Rana Kapoor’s man,” and his resignation is nothing but “an improvement towards corporate governance issues.”
The person quoted above added that the Reserve Bank of India had raised concerns about his “fit and proper” status. Further, the person added that Agarwal had criminal cases against him, and these were not disclosed to the bank’s Nomination and Remuneration Committee (NRC) at the time of his appointment, but only came to light months later.
The resignation letter penned by Agarwal, which CNBC-TV18 has reviewed, reads, “There are serious concerns as regards deteriorating standards of the corporate governance, failure of compliance, management practices and the manner in which the state of affairs of the Company are being conducted by Mr. Ravneet Gill- MD/ CEO, Dr. Rajiv Ubeoi- Senior Group President Governance & Controls, Mr. Sanjay Nambiar- Legal Head and Board of Directors. I have raised my concerns on these very critical matters from time to time in the overall interest of Yes Bank Ltd., and millions of its small and large depositors, investors, shareholders and all other stakeholders. I have left no stone unturned to discharge my duties and thus wrote a letter detailing all these matters in the attached letter dated 9th January 2020 (which is submitted to all the regulatory authorities)."
Responding to Agarwal's allegations, YES Bank said, "In his resignation letter (as enclosed), Agarwal has made certain observations on the Bank's governance and the same shall be duly examined by the Board. In this regard, the Bank would like to further intimate that the Bank was reviewing the 'fit and proper' status of Agarwal as directed by the Reserve Bank of India. In this respect, the Bank had obtained legal opinions from eminent jurists."
"These opinions were to be considered by the Nomination and Remuneration Committee of the Board ("NRC")/ the Board of the Bank in their meetings scheduled for today, i.e., January 10, 2020. However, prior to the commencement of the proceedings of these meetings, the Bank received the resignation of Agarwal. The NRC and the Board have taken on record Agarwal's resignation," the bank added.
The development comes ahead of a critical board meeting of the bank to consider fundraising. The board is meeting to consider investment proposals from a clutch of investors, including $500 million from Citax Holdings and $1.2 billion from Canada-based Erwin Singh Braich & SPGP Holdings.