Yes Bank MD and CEO Rana Kapoor: AFP
Yes Bank MD and CEO Rana Kapoor: AFP

Shares of private sector lender Yes Bank nosedived 34% on Friday after the Reserve Bank of India (RBI) denied an extension to the bank’s managing director and chief executive officer Rana Kapoor.

Yes Bank hit an intra-day low of 210.10 rupees on the Bombay Stock Exchange, down from the previous close of 318.50 rupees. At 12 noon it was trading at 254.85 rupees.

The bank’s board and shareholders had in June approved another three-year term for Kapoor, who co-founded the bank in 2004 and continues to play an active role in it. However, after RBI’s ruling, Kapoor will now have to step down on January 31, 2019.

Although the central bank has not disclosed why it cut short Kapoor’s tenure, brokerages point to Yes Bank’s discrepancies in the reporting of non-performing assets or bad loans in recent years. The RBI had previously taken note of these discrepancies and for two consecutive years Yes Bank’s bad loan figures were revised upwards following RBI intervention.

The bank’s board of directors will meet on September 25 to decide on the future course of action.

Kapoor founded Yes Bank along with two of his colleagues at Rabo India Finance, Ashok Kapur and Harkirat Singh. Singh left the company due to differences among the major shareholders, while Kapur was tragically killed during the November 2008 Mumbai terror attack.