Rana Kapoor, a former Bank of America executive , set up Rabo India Finance, a non-banking finance company, with the help of Rabo Bank in 1997-98, along with his partners Harkirat Singh and Ashok Kapur. Rana Kapoor was Ashok Kapur’s brother-in-law.
That marked the start of an aggressive entrepreneur in the financial services space, who would continue his journey in the next two decades until it was cut short by the Reserve Bank of India in 2018.
After setting up Rabo Finance, the trio decided to open a bank since the government was planning to offer new banking licences. They succeeded, but a year before Yes Bank started operation, Mr. Harkirat Singh fell out with Ashok Kapur and Rana Kapoor and quit the venture. So, Yes Bank started operation in 2004, with Ashok Kapur as chairman and Rana Kapoor as MD & CEO. The bank had an initial public offering in the same year.
During the first phase of growth, the bank, under Mr. Kapoor, focused on the retail liabilities franchise and corporate lending. Just when Yes Bank was preparing for the second phase, Ashok Kapur was killed in the 2008 terror attack in Mumbai.
Yes Bank, however, kept its growth momentum. Around 2012-13, a controversy broke out when Ashok Kapur’s wife alleged they were not given proper representation in the board of the bank.
The Kapurs and Rana Kapoor would reach a truce in 2019.
Meanwhile, Yes Bank was on the path of aggressive growth. Its exponential growth since 2014 did not go unnoticed by the banking regulator. As on March 31, 2014, the bank’s loan book stood at ₹55,633 crore and deposits ₹74,192 crore. The loan book grew to ₹2,24,505 crore at the end of the second quarter (September) of the current financial year, while deposits were at ₹2,09,497 crore. So in the last five years, the loan book grew by over four times, but deposits failed to keep pace. Asset quality worsened during the period, with gross non-performing assets going up from 0.31% as on March 2014 to 7.39%.
The RBI was also worried about governance practices. It denied Rana Kapoor three more years after his term ended in August 2018, despite the board’s endorsement. He was finally given extension till January 2019.
After quitting the bank, Rana Kapoor would move quickly to sell his stake and by November 2019, his stake in the bank would come down to 900 shares, held by Yes Capital (India) Private Limited.
Two days after the government put a moratorium on the bank, the Enforcement Directorate arrested him under the Prevention of Money Laundering Act (PMLA) because he was not allegedly cooperating in the probe.