HOW M. DAMODARAN, FORMER SEBI CHAIRMAN AND INDEPENDENT DIRECTOR OF YES BANK SAVED YES BANK'S GOVERNANCE FRAMEWORK

 HOW M. DAMODARAN, FORMER SEBI CHAIRMAN AND INDEPENDENT DIRECTOR OF YES BANK SAVED YES BANK'S GOVERNANCE FRAMEWORK

TO END RANA KAPOOR’S TENURE AS MD & CEO

M. Damodaran, former SEBI chairman and Independent Director of Yes Bank, played a crucial role in safeguarding the bank’s governance by refusing to extend promoter Rana Kapoor’s tenure as MD & CEO and ensuring a professional successor, Ravneet Gill, was appointed. This move aligned with RBI’s directive and helped restore regulatory confidence in the bank.

RBI’s DIRECTIVE

The Reserve Bank of India (RBI) had directed that Kapoor’s tenure should not be extended beyond this date, citing governance concerns.

•     The board, including Independent Directors such as M. Damodaran, supported RBI’s stance and facilitated succession planning.

DISCREPANCIES IN THE REPORTING OF NON-PERFORMING ASSETS (NPAS)

The RBI’s communication revealed serious discrepancies in the reporting of non-performing assets (NPAs) by the promoter turned MD-CEO Rana Kapoor. This exposed not merely a financial misstatement but a systemic governance failure. Damodaran immediately recognized that the crisis was not just about correcting disclosures—it demanded urgent leadership change and restoration of institutional credibility.

STRATEGIC IMPLICATIONS

•     The refusal to extend Kapoor’s tenure marked a shift in governance culture, emphasizing regulatory compliance over promoter influence.

•     Gill’s appointment was seen as a move to professionalize leadership and reassure investors and regulators.

•     However, Yes Bank continued to face financial stress in subsequent years, eventually requiring restructuring and capital infusion.

INDEPENDENT DIRECTOR ROLE FROM PASSIVE GOVERNANCE TO ACTIVE STEWARDSHIP

The YES Bank’s Board strengthened oversight mechanisms in line with statutory obligations under the Companies Act, 2013 (notably Sections 134, 166, and 177) and SEBI’s LODR Regulation 18, ensuring accurate financial reporting, transparency, and fiduciary accountability. This marked a decisive shift from passive governance to active stewardship. They facilitated RBI bailout plan with capital infusion from banks led by State Bank of India and ensured continuity of banking operations.

INDEPENDENT DIRECTOR’S INTERVENTION

M. Damodaran’s decisive intervention did more than contain the Yes Bank crisis—it prevented a systemic collapse by enforcing discipline at the highest level of governance. Yet, despite averting a deeper financial disaster, his role remains one of the most under-recognized acts of leadership in Corporate Governance Administration.

YOUR COMPLIANCE PARTNER – R V - SECKAR , FCS, LLB 79047 19295