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Yes Bank CEO gets six-month extension as SMBC prepares to take charge
The six-month extension given to Yes Bank chief Prashant Kumar aims to give incoming shareholder, Sumitomo Mitsui Banking Corporation (SMBC), room to decide the lender's leadership and strategy once the ownership changes, said industry insiders.
The private-sector lender last week told exchanges the Reserve Bank of India (RBI) had approved Kumar's extension as managing director (MD) and chief executive officer (CEO) till October 6. However, Yes Bank did not say how long an extension it had sought for Kumar.
Kumar has led the bank since its reconstruction in March 2020. He was first appointed the bank's administrator and later made the MD & CEO. Before that, he was deputy MD and chief financial officer of State Bank of India (SBI).
Kumar received his first extension as Yes Bank MD & CEO in October 2022 for a three-year period. ALSO READ: RBI gives Yes Bank MD & CEO Prashant Kumar 6-month extension: Lender
After SMBC announced that it will buy a 20 per cent stake in the private lender from SBI and others, reports said that Yes Bank's board is considering appointing a new MD & CEO and has engaged a headhunting agency to assist in the search. (SBI and other lenders had chipped in to reconstruct Yes Bank for over Rs 13,000 crore.)
Kumar, over five years, has shifted the bank's focus from 'affluent' to 'mass affluent' customers and transformed its corporate-heavy book into largely retail, including MSME. Retail and SME books together constitute 60 per cent of its total loan book, compared to 36 per cent in March 2020. The bank's asset quality has improved with gross non-performing assets at 1.6 per cent at the end of March 2025, compared to almost 17 per cent at the end of March 2020.
'We are talking about the next five years because we have made the balance sheet strong enough, where the future earnings are not going to be impacted because of any past impact,' Kumar told 'Business Standard' last month.
The RBI is allowing leeway for new shareholders to take their call about the bank's management, according to Abizer Diwanji, founder of NeoStrat Advisors LLP. The expectation seems to be that regulatory approvals will be secured in six months, allowing the new ownership (along with their representatives on the bank's board) to decide the bank's leadership.
'Under Kumar, the bank's retail strategy is yet to play out well. The cost-to-income ratio remains elevated, highlighting the need for more corrective measures on the retail front. Additionally, priority sector lending obligations have put pressure on margins, and key metrics like return on assets (RoA) and return on investment have shown limited improvement. That said, Kumar's conservative approach has helped keep asset quality at a manageable level,' said Diwanji.
The bank aims to have a RoA of 1 per cent by FY27. In FY25, the RoA was at 0.6 per cent. It hopes to reach 1.5 per cent RoA in the next four-five years, Kumar had said previously.
'The bank has performed reasonably well, with shareholders — including SBI and other private sector banks — doubling their investment over the past five years. The six-month extension granted to the current MD & CEO provides flexibility to the new shareholder, SMBC, to decide on the leadership that will drive their strategic vision for the bank going forward,' said an industry expert, who did not wish to be named.
'Therefore, the shorter extension for the incumbent MD & CEO is likely not a reflection of performance, but rather a move to allow the new stakeholder greater flexibility in shaping the bank's future,' said the expert.
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It was bought for Rs 10 per share, though Kalanithi himself had purchased shares from Dayalu on Oct 28, 2005, at the rate of Rs 3,173.04 per share. Explaining how the shares held by Dayalu Ammal were undervalued and purchased from her for Rs 100 crore by deceit, Dayanidhi Maran said: 'You illicitly acquired the shares of Dayalu using funds drawn from M/s SUN TV Private Limited, without providing any consideration for the said transaction. From the company's inception, no dividends were ever declared until 2005. The declaration of a dividend was made unilaterally and fraudulently by you, solely to make payment towards purchase of shares from Dayalu. By virtue of the aforesaid fraudulent actions, you have also committed a significant deception against Dayalu. If at all the shares had not been transferred from her name, she could have received the full amount of Rs 100 crore through dividends alone while retaining her existing shareholding.' This is not Dayanidhi Maran's first legal notice to Kalanithi Maran. On Oct 7, 2024, he had issued a notice, which elicited 'a vague reply without any particulars'. However, following that notice, Kalanithi paid Rs 500 crore to his sister Anbukkarasi, who too is a legal heir of senior Maran, towards part of a settlement and initial payment. 'These payments made to your sister, after a lapse of 21 years from the death of our father, are nothing but an attempt to suppress the truth and to silence her from revealing the illegal acts committed by you,' said the notice. Referring to Kaveri Kalanithi's hefty salary, Dayanidhi Maran said she unjustly enriched herself by getting Rs 87.5 crore per annum as salary. 'This shows your devious operation in swindling and looting the company money,' he said, adding: 'You and your wife Kaveri Kalanithi are directed to return, without delay, the entirety of the monetary benefits, dividends, assets and all forms of income unlawfully received or appropriated by you from the year 2003 till date, to Dayalu and the legal heirs of (Murasoli) Maran. ' The notice was served to Kalanithi Maran, Kaveri Kalanithi, Ravi Ramamoorthy, Natarajan Sivasubramanian (chartered accountant), Sridhar Swaminathan (financial consultant), Swaminathan and Sharad Kumar.
