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

In fact several board members said that they used to believe what was put forth by the management. ‘You know data can be misrepresented,’ a board member told me.

This dilly-dallying dented the credibility of the RBI as well. The RBI had appointed celebrated deputy governor Rama Subramaniam Gandhi to the YES Bank board as the nominee director. At the time of his appointment, in 2019, a senior RBI official told me, ‘We have appointed Gandhi on its [YES Bank’s] board. We know there is a problem, and by appointing him we are giving it due importance.’

But what did Gandhi do on the board? Every time the board announced that it was raising funds, Ravneet used to say that it was the unanimous decision of the board — and that included Gandhi. In fact, Gandhi was part of the board that was dismissed on 5 March by the RBI, only to be reinstated later on when the SBI acquired the majority stake in it.

But what was Gandhi doing when the bank delaying much-needed fund-raising. In fact, in every board meeting those days, it was being discussed that it was a do-or-die situation for the bank.

I tried asking many members of the board. Gandhi, on the face of it, seemed to have adopted a prolonged wait-and-watch strategy. ‘Towards the end, whenever the discussion used to take place, I remember Mr Gandhi used to be called. He was there. He would be like yes, I am aware. It was quite obvious that the RBI knew what was happening. We used to feel that the RBI was trying to give some more time to see if something could emerge out of it.’

Gandhi was appointed to thwart any undue influence by the nominees of the promoters on the board. How successful he was is subject to conjecture. In my opinion, he wasn’t. There was a lack of confidence in the management and the board by the investors. ‘There was a feeling that the bank wasn’t doing enough. So, none of us were willing to park our bets on that management,’ one of the investors, who later parked money at YES Bank said.

There was also chatter about Rana Kapoor still asserting some control over the board but the senior management was quiet on this. In fact, one of the senior executives from the risk team, who was a part of Rana’s cabal, still had access to the board and was attending the meetings regularly, in which Gandhi was also present. This is why I say that Gandhi wasn’t able to achieve what he was tasked with. Also, Gandhi, who is based out of Bengaluru, used to just fly in for the board meetings.

The board members interviewed said that they were never provided with the binding offers. But there were supporting documents that were provided to them. Agarwal has, in fact, claimed on record that there were no binding documents provided in these cases.

A senior executive, who was closely working on those deals, rubbished these charges when I questioned him about this. ‘Every single document pertaining to the offers we received is with the company secretary of the bank and these were also duly shared with the regulator. So, what you’ve been allegedly told is utter rubbish.’

In fact, I don’t blame Ravneet for not sharing documents with the board. To give you some perspective, the first time I spoke to Agarwal, he was towing Rana Kapoor’s line. The allegations he was making seemed eerily familiar with those made by the bank under Rana’s leadership. At one juncture, he told me, ‘Aapko mai yeh bol raha hu, aap yeh likhiye (You write what I am telling you).’ It agitated me, and I had no doubt in my mind that here was a guy who had some agenda.

Other than him, the fear was that most of the directors on the board of the bank, which was not reconstituted after Rana Kapoor’s exit, were supporting and leaking information to Rana Kapoor. The fear was that in a bid to make a comeback, Rana might sabotage the plan, said one of the board members.

One of the directors, who was neutral in all this told me: ‘How could he have trusted them and given them the binding offers when they were all Rana’s men?’

These apprehensions were shared by most of the regulators I interviewed for this book. ‘There were a lot of old-timers on the board of YES Bank. Ravneet tried everything he could. And he had to deal with Rana as well,’ one of the top market regulators told me.

On the other side of the spectrum, SEBI was playing spoilsport. One of the biggest challenges for the bank, regarding raising of capital, was that the investors did not believe that the pricing, as per SEBI norms, was reflective of the intrinsic value of the shares and therefore they wanted pricing dispensation.

If equity shares of the issuer have been listed on a recognized stock exchange for a period of twenty-six weeks or more as on the relevant date, the equity shares must be allotted at a price which is equivalent or lesser than: one, the average of the weekly closing price which is related to equity shares that are quoted on recognized stock exchange for twenty-six weeks preceding the specific date; or, the average of the weekly closing prices of the related shares quoted on a recognized stock exchange for two weeks preceding the specified date.

However, due to lot of stressed lending, YES Bank’s actual net worth at that point of time was (-)Rs 13,400 crore (yes, in negative). So, in essence, it meant that if the bank was liquidated at that point, the shareholders of the bank (roughly 16 lakh retail shareholders) would have to cough up this much money in an ideal scenario.

But SEBI declined to weigh in. Even the SBI was of the view that if it invested in the bank it would be at a significant discount to the market.

In all of this, many of my