With the Reserve Bank of India (RBI) in September directing Yes Bank to find replacement for the position of MD and CEO by January 31, Rana Kapoor reportedly has his eye on a new designation. According to draft consent pact being negotiated between the two promoters of the bank, Kapoor will be either the non-executive chairman, or MD and CEO, or a non-executive director, Mint reported.

Kapoor and Madhu Kapur, who is his sister-in-law, are the estranged co-promoters of Yes Bank. People close to Kapur told the daily that the consent agreement - a part of the ongoing negotiations to settle their legal disputes - has not yet been finalised and there could be more negotiations.

"The successors, legal representatives and assigns of Ashok Kapur [the bank's other co-founder] confirm that subject to approval of RBI and the shareholders of Yes Bank, they will consent and approve the appointment of Rana Kapoor either as non-executive chairman or MD & CEO of Yes Bank and such consent shall be deemed to be given by them at all times," the document reportedly reads. "In every other case, the Indian partners will have the right to jointly recommend the name of the non-executive chairman and MD & CEO of Yes Bank."

This development follows the ratings downgrade by Moody's Investors Service on Tuesday courtesy concerns over the transition in leadership as well as the governance issues. Yes Bank's stock took a further beating today after ratings agencies ICRA and CARE also downgraded their ratings.

In a regulatory filing Yes Bank yesterday disclosed that it will consider proposals for the appointment of independent directors at its upcoming board meeting on December 13, as well as recommend names for the chairman's post to the regulator. However, Kapoor will have to wait till at least February 2021 to get back into the MD's seat. As per existing norms, a whole-time director on the bank's board cannot be reappointed before two years from the date of stepping down.

According to the daily, Kapoor confirmed in the draft consent agreement that the nominee director that he appoints on the board "shall at all times be a non-independent non-executive director", except in the case where appointment of Kapoor himself [nominated by Kapoor and Kapur] is approved by RBI as either MD & CEO or non-executive chairman or a non-executive director. If Kapoor is appointed as the chairman, he will be on the bank's board as a non-independent executive director, according to the document.

It further states that the one director nominated by each Indian partner [Kapoor and Kapur] will not be liable to retire by rotation. "Further, the successors, legal representatives and assignees of Ashok Kapur confirm that the one nominee director that they appoint on the board of Yes Bank shall at all times be a non-independent non-executive director," the pact reads.

Significantly, the draft consent terms imply that the feuding promoters will end their differences with each other in court over the terms mentioned in the bank's articles of association that was legalised by MCA in 2005. The Kapoor and Kapur families have been clashing over board-level appointments, bonuses, dividends and other business-related issues for over a decade now, since Ashok Kapur's death.

"Madhu Kapur and her family want the bank to bear the former's legal expenses since they are co-promoters of the bank. This is one of the demands, which is also a part of the ongoing negotiations between the two promoters, but is not mentioned in the consent agreement," a source familiar with the discussions told the daily.

If things go to plan and the co-promoters agree on the terms of consent, the pact will reportedly be solemnised by the Bombay High Court and will be annexed with the existing articles of association.

Edited by Sushmita Agarwal