Kapoor, a veteran banker who never said no to risky loans

Mumbai: The word about Yes Bank in financial circles was that it was a lender who never said no to risky borrowers who had built a highly leveraged position. The veteran banker used his network capacity to lend and recover loans, distinguishing the bank from others that depended more on the process than on relationships.

When the business cycle changed and the central bank became tough on bad loans, Yes Bank ended up with a disproportionately high level of unprofitable assets (NPA) with a presence in almost all stressed accounts, whether IL&FS, the, and many others. Borrowers with problems.

Kapoor was expelled by the RBI last year and his creditors who had them under commitment ceded their shares in the bank, which he once described as diamonds that will never be sold. His successor, Ravneet Gill, has been fighting for a year to stay afloat in the bank that built Kapoor, but he ran out of time with the RBI disconnecting on Thursday.

Kapoor, who began his career as an intern at Citibank New York, joined Bank of America in 1980 and ran his wholesale banking business in Asia. He directed the investment bank of Grindlays, then the largest in India, until its acquisition by StanChart in 1998.

It was at this point that Kapoor began to pursue his dream of establishing his own financial institution by floating Rabo India Finance with his brother-in-law and another banker Harkirat Singh.

In 2003, Kapoor and Kapur floated Yes Bank, the second time the RBI was experimenting with the granting of a banking license to professionals. Time was fortunate, since a year later, another institution promoted by professionals, that of Ramesh Gelli, closed.

The increase in profits increased the price of the shares with the holding of Kapoor making him a billionaire. A large part of the bank's profits came from the initial fees it obtained in risky term loans.

Many bankers believe that Kapoor would have been better if he had agreed to sell his stake to new promoters and left Yes Bank in 2017. However, despite having been expelled by the RBI, Kapoor defended himself and vowed never to sell his shares.

Luckily, Yes Bank's problems got worse with a series of unexpected defaults that hit him in rapid succession, starting with IL&FS and DHFL. While his successor, Gill, went out of his way to attract new investors, the series of defaults and his slow resolution in bankruptcy courts made investors skeptical. Ultimately, the RBI had no choice but to use its ultimate weapon to place the bank under moratorium.

Even after launching the bank, Kapoor had three major setbacks. First, his brother-in-law and co-promoter Kapur was killed at the Taj hotel in Mumbai during the terrorist attacks of 11/26.

Shortly after, the global financial crisis broke out and there was a credit restriction, with Yes Bank severely affected by its dependence on wholesale loans. However, the subsequent relaxation of the central bank and government support helped the bank recover almost immediately. The third was a boardroom battle with his sister-in-law. While this ended in a truce, Kapoor did not have the satisfaction of having his own people on the board.

When things were going well, Kapoor used his participation to raise around Rs 630 crore promising his participation in the bank through two promoters, and. However, as the price of its bank's shares collapsed, the lenders began selling all their shares, further reducing the price of the shares and also damaging the bank's recovery plans.