YES Bank conduct: Governance experts raise questions

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The double whammy at embattled YES Bank has raised many questions over its functioning by the governance experts and investors alike.

On Friday, the bank's head of audit committee and an independent director -- Uttam Agarwal -- resigned from the bank alleging that the CEO Ravneet Gill has been misleading the investors on the much-needed fundraising issue. The bank also doubled down on its initial plan to raise $2 billion funds and said that it would be raising $1.4 billion funds -- the investors for which are still unknown.

The experts say that it's the time for the bank to act up now and line up the investors.

"The days of discussing are way past over. It is time to raise the money and put all this behind them. If the board had decided to raise money four months ago, I am not sure why they need to meet each month. They need to line-up investors and approach investors for approval," said Amit Tandon, Founder and MD at proxy firm Institutional Investor Advisory Services (IiAS).

However, some other experts believe that it is over the disagreements between the directors of the board that they have not been able to raise the funds.

"Yes Bank capital raising efforts have not fructified and there seems to be disagreement between the Board and the management on various fronts including capital raising, disclosures, etc," InGovern MD, Shriram Subramanian said.

The bank has been dilly-dallying on the much-needed fundraising plans, with the board meeting multiple times, without any concrete fundraising plan -- which was first reported by DH in September 2019.

At least five different analysts and market observers, that DH spoke to, said that the bank needs at least $3 billion for the survival immediately in one quarter. The bank has, however, not been able to come up with a concrete action plan over the same. 

As a fallout of the fiasco, the questions are being raised at former Reserve Bank Deputy Governor R Gandhi -- who was appointed by the central bank as the independent director of the bank to uplift its credibility.

"R Gandhi as a nominee of RBI should ensure greater accountability of the management," said Subramanian.

The financial markets are getting jittery over the issue as well, fearing a huge contagion. "It is one of the top five private banks in the country. In case it doesn't get needed funds, the contagion is going to be multiple times heavier than that of the IL&FS collapse," the CEO at a fund house, that had declined to give funds to YES Bank, told DH.

The fund houses on their part are worried about bank's surging contingent liabilities and depleting CASA.

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