Thrissur-based Dhanlaxmi Bank's managing director (MD) and chief executive officer (CEO) Sunil Gurbaxani has been voted out by shareholders during the annual general meeting (AGM). Over 90% votes went against the resolution to approve appointment of Mr Gurbaxani as MD and CEO of the Bank. This clearly is a snub for the Reserve Bank of India (RBI), which had approved the appointment of Mr Gurbaxani for three years as MD and CEO of Dhanlaxmi Bank, in February.
During the AGM, institutional investors fully backed the proposal. However, rest of the public shareholders voted against it. Out of the total 8.01 crore votes, 76.21 lakh votes were in favour, while 7.25 crore votes were against the proposal of approving Mr Gurbaxani's appointment.
While rejecting Mr Gurbaxani's appointment, the shareholders approved re-appointment of CK Gopinathan as director of the Bank. The AGM also approved with majority, the proposals to appoint G Subramonia Iyer, Dr Capt Suseela Menon R, G Rajagopalan Nair and PK Vijayakumar as independent directors of Dhanlaxmi Bank. CK Gopinathan holds 7.5% stake in the Bank, as per the Dhanalaxmi Bank's March 2020 shareholding. B Ravindra Pillai with 10% and Kapil Wadhawan with 5% are the two other big individual shareholders of Dhanlaxmi Bank.
Earlier in June this year, Sajeev Krishnan, part-time chairman and independent director, another independent director KN Murali and G Venkatnarayanan, who was additional director, had resigned from the board of Dhanlaxmi Bank citing personal reasons. All three had worked at senior levels on State Bank of India (SBI) group and had a good track record.
As per media reports, following lobbying, infighting at the top and an exodus from the Dhanlaxmi Bank board, RBI wrote a letter asking them to terminate a chief general manager of the Bank. It’s unprecedented for RBI to intervene and terminate the services of CGL-level officer. However, a similar alacrity and intervention has been missing in many bigger banking debacles such as Yes Bank and Punjab and Maharashtra Cooperative Bank.
Dhanlaxmi Bank was removed from the RBI's prompt corrective action (PCA) framework, subject to certain conditions and continuous monitoring, as the Bank is found to be not breaching any of the risk thresholds of the framework.
This is the second private bank where the shareholders have voted against the appointment of the MD and CEO in recent days.
Earlier, the shareholders of Lakshmi Vilas Bank (LVB) had voted out seven directors, including the MD and CEO, in its AGM.