(Reuters) - India’s Yes Bank Ltd on Wednesday said the Reserve Bank of India had reaffirmed that the retail bank should appoint a successor to Chief Executive Rana Kapoor by February 1, 2019.
Last month, the central bank said Kapoor could only stay in his job until Jan. 31 without specifying a reason, even though Yes Bank’s shareholders’ had agreed to extend his term for three years.
The lender’s shares had dropped about thirty percent on the news.
Yes Bank then asked for central bank approval to extend Kapoor’s term beyond January to allow more time to find a replacement. But the central bank has stuck with its deadline for a new CEO.
The Reserve Bank’s action highlights its increasingly proactive approach to tackling the problems in India’s banking sector caused mainly by bad debts.
Kapoor, viewed as a charismatic business leader and one of India’s most prominent bankers, co-founded Yes Bank in 2004 and has been instrumental in creating the country’s fifth largest private sector bank by assets.
But Yes Bank’s rapid expansion came at a cost of rising bad loans - a problem plaguing the Indian banking industry.
The bank has hired advisory firm Korn Ferry to help to search for Kapoor’s successor.
The bank aims to complete the recruitment process by mid-December, Yes Bank said in a statement after markets closed on Wednesday. Its shares fell nearly 7 percent in a broader Mumbai market that ended 1.2 percent lower.
Reporting by Sharnya G in Bengaluru; Editing by Vyas Mohan and Jane Merriman