The Banker Who Crushed His Diamonds by Furquan Moharkan (read novel full txt) 📕

However, there was an alternative story which a member of the erstwhile management team told me about: ‘As for the SPGP offer, when the binding term sheet was received, it was immediately shared with the lawyers to ascertain that it was indeed binding. The lawyers opined that the term sheet not only was a binding one, but also constituted unpublished price sensitive information (UPSI) and should therefore be immediately disclosed to the exchanges. When the team informed me about that, I told them to first speak with SEBI in the matter. SEBI informally concurred with the view expressed by the lawyers that disclosure was warranted.’

This conversation with SEBI was conducted by the head of investor relations at YES Bank and the head of regulations.

Thereafter, Ravneet is said to have done two things: convening a meeting of the board’s capital-raising committee and appraising them of the situation. A decision was duly taken to go ahead with the disclosure, and informing RBI about the impending disclosure and also sharing a copy of the binding term sheet with them. All this is duly documented and the relevant papers are on file.

The management’s account more or less matches that of the different directors of the bank who I interviewed during the course of this book: that there was a call over which offer was conveyed and there was no mention about giving the binding term sheet to the board members.

This could have, the fear was, by no means, been approved by the RBI. But the question to ponder over is how the bank’s board even considered such a proposal. It raises questions on Ravneet’s leadership skills as well. After the bailout of YES Bank, when I asked one of the image management executives, who had worked closely with him at YES Bank, I was told: ‘He was being misled. It is embarrassing.’ If the CEO of the bank, at such a crucial stage, is vulnerable to being misled, then the bank should have ideally rethought its leadership team.

Despite this, everyone — from banking reporters to market analysts — was now awaiting 10 December, when the bank had committed to finalizing the fund-raising plan.

What was the result of the 10 December meeting? The bank decided to shelve the decision until the next meeting, doing the opposite of what it had committed to. ‘The board is willing to favourably consider the offer of US$500 million of Citax Holdings and Citax Investment Group and the final decision regarding allotment to follow in the next board meeting, subject to requisite regulatory approval(s),’ it informed the exchanges. It also said that it was in talks with Braich with regard to raising funds, despite the fact that his credentials were under serious question.

The bank on its part is said to have hired Kroll — a corporate investigations and risk-consulting firm — to investigate the credentials of Erwin Singh Braich. The delay in decision-making was because of the delayed due diligence process.

This was the time when I started investigating the bank yet again. It was, after all, the third meeting where the bank had done nothing but postpone the decision. That is when I came to know about the depleting deposits of the bank. But there was yet another piece of information that the executive told me: ‘How would RBI even approve it? They are talking of European investors. The investors they are talking of won’t be approved by RBI.’1 I posed this question to the bank’s communication team, about disclosing the names of actual owners and the ultimate beneficiaries of the European investors that they were talking about. They, till now, haven’t got back on that.

On 10 January, the bank’s board met again. Two things to note here: the top-tier fund house, whose name the bank had said it would disclose in the first week of December, was still kept hidden like some treasure; and Braich, along with many others, were still in contention. The bank’s statement to the exchanges made things more vague. Other than declining Braich’s offer, the bank didn’t come clean on the remaining $800 million. The bank said that it has decided on a plan that would look at ‘raising of funds up to Rs 10,000 crore, in one or more tranches, on such terms and conditions as it may deem fit, by way of issuance of securities including but not limited to Qualified Institutions Placement (QIP)/Global Depository Receipts (GDRs)/American Depository Receipts (ADRs)/Foreign Currency Convertible Bonds (FCCBs)/or any other methods on private placement basis.’ Who were the suitors, when would it happen? There was no clarity.

Many governance experts raised an alarm. ‘The days of discussing are over. It is time to raise the money and put all this behind them. If the board had decided to raise money four months ago, I am not sure why they need to meet each month. They need to line-up investors and approach them for approval,’ Amit Tandon, founder and MD at IiAS told me during the course of one of my stories after this meeting.

But this meeting would always be remembered for the resignation of the chairman of the audit committee, Uttam Prakash Agarwal, and the board-room tussle becoming public. More on that in the next chapter, but let’s see what happened next at YES Bank.

All this while, various board members told me that the board was now feeling that all was not right. Many had stopped making a physical appearance at the meetings. According to the chronicles of various board members, the dejected Brahm Dutt, the then chairman of YES Bank, in one such meeting snorted: ‘Why are we even reading out the names when nothing is happening at all.’

Many board members had started to write mails of discontent to both Ravneet and Brahm by this time, stating that the uncertainty was denting their and their organization’s professional image. I personally know one such director who said on condition