Reserve Bank of India (RBI) on Wednesday refused to grant more time to Yes Bank's long serving CEO and MD Rana Kapoor and asked the private sector lender to appoint his successor latest by February 1, 2019.
Last month, the Yes Bank board had sought at least a three-month extension for Kapoor from the RBI beyond January 31, 2019, stating that finding a suitable successor is a "time consuming challenge".
The central bank, however, has not agreed to the suggestion and insisted Yes Bank's board should find his successor within the stipulated time.
"The Reserve Bank of India has reaffirmed that a successor to Rana Kapoor, MD & CEO, YES Bank should be appointed by February 1, 2019," the lender said in a stock exchange filing.
The RBI had earlier curtailed the three-year term that the board had sought for Kapoor, also one of the promoters of the bank, to January 31, 2019, and asked the bank to find a replacement.
Kapoor has been in his position since the inception of the bank in 2004.
The bank's board has already established a search and selection committee comprising three members from the existing nomination and remuneration committee along with two external experts to identify Kapoor's successor.
Kapoor owns 10.66 per cent share in the bank.
Yes Bank shares dropped 6.85 per cent to close at Rs 231.75 apiece on BSE.
Kapoor is the second chief executive at a private sector lender after Shikha Sharma of larger rival Axis Bank to face regulatory wrath in terms of extension of CEO's tenure.
Both the banks were found to have under-reported non-performing assets by over Rs 10,000 crore each for two consecutive years in regulatory audits conducted by the RBI.
The RBI has been maintaining a cautious stance with regard to heads of private sector banks in the recent months.
Earlier this week, it gave approval for only three-year to Sandeep Bakhshi as CEO and MD of ICICI Bank, as against five-year term sought by the board of the country's largest private sector bank.