Yes Bank crisis | Rana Kapoor: The rise and quick downfall of a maverick banker

The journey of an aggressive entrepreneur comes to a stop

March 08, 2020 11:00 pm | Updated December 03, 2021 06:52 am IST - Mumbai

 Rana Kapoor

Rana Kapoor

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.

Also read: Yes Bank founder Rana Kapoor sent to ED custody till March 11

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%.

Also read: Explained: Why did Yes Bank have to be bailed out?

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.

Top News Today

Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in

Comments

Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.