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Former chief of Yes Bank Ltd., Rana Kapoor had to pay back bonuses worth Rs 1.44 crore to the bank he co-promoted, following directions from the Reserve Bank of India, according to the lender’s Annual General Meeting notice sent to stock exchanges on Thursday.

Kapoor stepped down as the bank’s chief executive officer in January after the regulator declined to give him another term. While the RBI didn’t publicly disclose its reasons for doing so, a divergence in bad loan reporting and a weak compliance culture at the bank were perceived to be the reasons.

The notice reveals that apart from asking Kapoor to step down, the regulator also suggested a clawback of bonus.

"In accordance with the directions of RBI, the Board of Directors of the Bank had considered and approved clawback of 100 percent of performance bonus paid to Mr. Rana Kapoor for FY 2014-15 and FY 2015-16 net of taxes,” said the notice while seeking approval of perquisites to Kapoor for a period of three months after he stepped down as CEO.

Performance bonus worth Rs 62,17,823 given to Kapoor in financial year ended March 2015 and Rs 82,45,416 in financial year ended March 2016 was clawed back. The board did not pay any performance bonus to Kapoor in financial years 2016-17 and 2017-18.

The annual report, also released on Thursday, showed that Kapoor was paid an annual remuneration of Rs 6.48 crore for the year ended March 2019. The bank’s board had also paid Rs 86,07,435 worth perquisites to Kapoor, as he used bank provided accommodation, transport and other facilities in the period between Feb.1 to April 30. The perquisites were part of Kapoor’s annual compensation package.

Kapoor continues to be one of the promoters of Yes Bank and holds 10 percent in the lender.

Ravneet Gill, who took over from Kapoor as CEO, was brought in with a compensation package of Rs 6 crore, shows the annual report. In addition to this, Gill was granted 67.50 lakh stock options. His annual increment would be subject to a maximum cap of 20 percent and any bonus payouts would be in accordance with regulatory guidelines, said the annual report.

Private Bank CEOs: Compensation vs Accountability

In a discussion paper issued in February, the RBI had proposed tougher rules for compensation of private bank CEOs.

As per the suggestions, at least 50 percent of a bank CEO’s compensation should be variable and employee stock options should be counted as part of this. The variable pay should be capped at 200 percent of the fixed pay, the RBI had suggested. In addition it had recommended that private bank boards could introduce clawback measures against bank CEOs who were in-charge when the bank reported large asset quality divergences.

The new rules are yet to be finalised.

While clawback provisions already existed in most private banks, they are not commonly used in India.

ICICI Bank Ltd., in January, had announced that its board had decided to clawback performance bonuses paid to its former MD & CEO Chanda Kochhar, between April 2009 and March 2018, after an internal investigation found proof of improper conduct on her behalf while approving certain loans.

Kapoor is now the second large private bank CEO to see such a clawback in salary in recent months.

Yes Bank reported an unanticipated loss worth Rs 1,506 crore for the quarter ended March 31, as Gill moved to clean the bank’s books. Gill also announced a watchlist of more than Rs 10,000 crore in loans, which were labelled as stressed.

On Tuesday, Yes Bank informed stock exchanges that the RBI had nominated former Deputy Governor R Gandhi on the bank’s board as an additional director. The RBI did this after invoking a rarely used power under the Banking Regulations Act. Typically the central bank uses this power if it feels a lender needs close regulatory scrutiny.