By Ruma Dubey
Two friends and co-workers become co-brothers. Together, they set up a bank. One friend dies a tragic death. Now the other surviving friend is running the bank but wants all name of his dead friends obliterated from the bank. That, in short iS the current story of Yes Bank.
The battle between the Kapur and Kapoor has now been dragged to the courts and has the daughter of one of the founders of the bank – Ashok Kapur, Shagun Kapur Gogia at the vortex of the storm. The much awaited Board meet happened yesterday but no decision on appointment of Shagun to the Board was declared as it is to be conveyed through the High Court on 1st July.
Without trying to sound like a column from a gossip magazine or a narrative from an Ekta Kapoor serial, here’s a low down on this battle at Yes Bank.
It was in 1999 that Ashok Kapur (ex-country head of ABN Amro Bank), Harkrit Singh (ex-country head of Deutsche Bank) and Rana Kapoor (ex-head of corporate finance at ANZ Grindlays Bank), came together and set up a non-banking finance company in partnership with Rabobank of the Netherlands in which the Indian partners held 25% and Rabo 75%. The bank came into existence in 2003, the same year when Harkrit Singh quit and then it was the two – Ashok and Rana. Yes Bank got the banking license in 2004 and in 2005, it came out with an IPO. Kapur was the Chairman and Rana was the MD and CEO looking after the day-to-day operations.
Ashok’s wife is Madhu Kapur and it was the behest of Ashok that his wife’s sister, Bindu got married to Rana Kapoor thus Ashok and Rana became related not just by work but as co-brothers. Ashok Kapur has two children – a daughter Shagun and son, Gaurav. Rana has three daughters – Radha, Rakhee and Roshni. All was hunky dory till the terrorist attack of 26/11 in Mumbai. Ashok was at the Trident Hotel and he perished in the attack.
The family took some time to get over the grief and in 2009, Madhu Kapur made a bid to get her daughter nominated to the Board and it was rejected on grounds of not fulfilling RBI’s definition of “fit and proper”. Shagun was considered to be too young then. Once again in 2011, the nomination did not go through. More importantly, the name of Madhu Kapur was struck off from the list of major shareholders. Till end of 31st March 2010, the shareholding pattern showed that Rana Kapoor group held 14.8% stake and Madhu Kapur group held 12.68%. As at 31st March 2015, Rana Kapoor held 11.77% stake and Madhu Kapur held 10.29%.
The hurt came in Dec 2012, when Rana published a brief history of Yes Bank and shockingly, not even a passing reference was made in the entire publication about its co-founder, Ashok Kapur. And then the last straw, a move which Shagun says was to completely decimate the Kapur name from any activity of the bank – three directors were to be nominated - Diwan Arun Nanda, Ravish Chopra and M R Srinivasan ( the same names which are currently in the midst of the storm) and this time around, no word from the Kapur’s was sought regarding this nomination. Madhu felt that as the legal heir to Ashok , she had the right to legally nominate directors to the Board. But she was not consulted and Chopra and Srinivasan were recommended by Rana. If they had allowed this nomination also to pass, it would have meant that the Kapur’s were content being mere rubber stamps. Thus Madhu Kapur on 6th June 2013, made a request to nominate her daughter Shagun on the Board, moving the High Court and it was on the same day that she stalled the appointment of the three directors.
Well, the same saga has continued for the past couple of years and the judgement which came on 17th June’15, finally lay rest to some issues; mainly that of Madhu/Shagun getting berth on the Yes Bank Board. Clearly, that was something which as such would have never happened. What happened was indeed very unfortunate but one has to realise that Yes Bank is a professionally run bank and not a family organization. Thus getting berth on the Board because her father was there would as such hold no water. Even as per RBI guidelines, this would not have happened as it does not allow more than one family member or a close relative or an associate which means partner, employee or director to be on the board of the bank.
Regarding the right to appoint directors on the Board, as per the latest Supreme Court ruling, both Rana Kapoor as well as Madhu Kapur (and her children) have the right to jointly appoint nominees on the Board and this right was bequeathed to her. Justice Patel said that, “ … any recommendations made by Rana Kapoor without the concurrence and consent of the plaintiffs are also ultra vires (Latin word for beyond powers) the articles and are null and void.”
Post this order, the high court stated that the appointment of the directors of Yes Bank - Ravish Chopra, M.R. Srinivasan, Diwan Arun Nanda, Ajay Vohra, Rajat Monga, Sanjay Palve and Pralay Mondal were stated as invalid and said that it was “ultra vires to the articles of association of the bank” and “null and void”. And today, Yes Bank issued a statement saying that M.R. Srinivasan and Diwan Arun Nanda have assumed office on the bank’s board because they are above the cut-off age of 70 years set by RBI for bank directors.
And if we look at this feud from a purely layman eyes, it is apparent that Rana has been unfair with the Kapurs. He has allowed petty family politics to cloud the Board. The fact that he is trying to obliterate the name of Ashok Kapur who died an unfortunate death is simply unfair. Shagun is more than fit and proper in terms of her qualifications and work experience. More importantly, she has one important quality which no “outsider” will have – emotional value for Yes Bank. She has been witness to her parents build the bank and that emotional attachment will motivate her to always give her best to the Bank. If Rana had not systematically tried to decimate the name of Ashok Kapur and take away the rights of the Kapur’s, hurting them with these actions, this fight would have never happened.
Ambani’s son taking over the mantle from Mukesh or Birla’s son becoming the heir to Kumaramangalam are very apparent truths; we never debate these nominations. But a Bank is not a family run business and hence the rules are different. Yet, one cannot help but feel that great injustice has been done to the family of Kapur.
This family battle will have no major impact on either the fundamentals of the bank or on the stock price. It is just that it leaves a bad taste.
