Yes Bank , a prominent Indian private sector bank, has recently obtained approval for significant changes to its investment agreement with Verventa Holdings Limited (VHL), an affiliate of funds advised and managed by Advent. The bank's board of directors approved these modifications through a circular resolution passed on July 23, 2025.

Key Modifications to the Investment Agreement

The amendment to the investment agreement, originally executed on July 29, 2022, introduces several important changes:

1. Director Nomination Rights: VHL now has the right to nominate one non-executive director liable to retire by rotation on Yes Bank's board. This replaces the previous provision for nominating a non-retiring non-executive director.

2. Removal of Alternate Directorship: The amendment eliminates VHL's rights to appoint an alternate director.

3. Revised Fall-away Threshold: The threshold for VHL to maintain its right to nominate a director has been significantly adjusted. Previously, VHL needed to hold at least 50% of the securities issued to it upon completion of the original investment agreement. Now, this right is maintained as long as VHL holds at least 5% of Yes Bank's total paid-up share capital on a fully diluted basis.

Current Shareholding and Impact

As of the latest disclosure, Verventa Holdings Limited holds a 9.19% stake in Yes Bank's total paid-up share capital. This positions VHL well above the new 5% threshold required to maintain its board nomination rights.

Regulatory Compliance

Yes Bank has emphasized that this transaction does not fall under the category of related party transactions. The bank has duly informed the National Stock Exchange of India and BSE Limited about these changes, in compliance with the Securities and Exchange Board of India (SEBI) regulations.

Implications for Yes Bank

These modifications to the investment agreement signify an evolution in the relationship between Yes Bank and Verventa Holdings. The changes in director nomination rights and the lowered threshold for maintaining these rights could potentially lead to more dynamic board composition and governance structures for the bank in the future.

Yes Bank continues to navigate its strategic partnerships and investment agreements, demonstrating its commitment to transparent communication with regulators and shareholders alike. As the banking sector in India continues to evolve, such modifications to key investment agreements may play a crucial role in shaping the bank's future trajectory and governance model.

Yes Bank , one of India's prominent private sector banks, is navigating a crucial phase in its leadership succession plan, closely tied to the anticipated stake acquisition by Sumitomo Mitsubishi Banking Corp (SMBC). The bank's future direction is set to be shaped by this strategic move, which has implications for both its governance and market position. However, the bank now faces additional challenges as allegations of serious misconduct have emerged.

Allegations of Misconduct

Yes Bank is currently facing allegations of serious misconduct related to its loan approval process for Anil Ambani's Reliance Group companies. The specific nature and source of these allegations have not been disclosed in the available information. This development adds a layer of complexity to the bank's ongoing transitions.

Leadership Transition

Yes Bank's succession planning is currently on hold, awaiting the completion of SMBC's acquisition of at least a 20% equity stake. This development has led to an extension of the current MD and CEO Prashant Kumar's tenure by six months from October. This extension is strategically timed to allow the incoming Japanese investor, SMBC, to participate in board discussions regarding the bank's future leadership.

SMBC's Stake Acquisition

The Japanese banking giant, SMBC, has taken significant steps towards acquiring a substantial stake in Yes Bank:

• Applied to the Reserve Bank of India (RBI) for acquiring a 20% stake from the State Bank of India (SBI) and other banks
• Submitted an application to the Competition Commission of India for regulatory approval
• Initially applied for a 25% ownership, indicating potential for future stake increases post-approval

Market Challenges

Prashant Kumar, the current MD and CEO, has highlighted some challenges facing the banking sector:

• The September quarter is expected to be challenging due to sluggish credit growth
• Impact of repo rate cuts on margins is a concern
• Yes Bank's performance in the June quarter showed:
  • 5.00% growth in advances
  • 4.00% increase in deposits

Kumar noted weak credit demand, attributing it to corporates increasingly accessing debt and overseas markets rather than traditional bank loans.

Recent Corporate Governance Update

Yes Bank has made changes to its agreement with Verventa Holdings Limited (VHL), an affiliate of funds advised/managed by Advent. Key points from the amendment agreement include:

This amendment, approved by the board on July 23, 2025, reflects Yes Bank's ongoing efforts to refine its corporate governance structure amidst changing stakeholder dynamics.

As Yes Bank navigates these transitions in ownership and leadership, along with addressing the recent allegations, the banking sector watches closely. The completion of SMBC's stake acquisition, the subsequent leadership decisions, and the resolution of the misconduct allegations will be crucial in shaping the bank's strategy and performance in the competitive Indian banking landscape.