Suspense continues over the next course of action at the Kerala-based Dhanlaxmi Bank, a day after the shareholders voted out managing director (MD) and chief executive officer (CEO) Sunil Gurbaxani at the annual general meeting (AGM) on 30th September, said industry officials.
"The bank has communicated the matter to the Reserve Bank of India (RBI) about the shareholders' decision at the AGM to vote out Gurbaxani. The bank Board has sent to RBI its decision to form a Committee of Directors (CoD) to manage the day-to-day affairs of the bank till a new Managing Director and CEO is appointed," a source told IANS preferring anonymity.
The Bank board has recommended a three-member CoD comprising G Subramonia Iyer (chairman), G Rajagopalan and PK Vijayakumar.
On the other hand Mr Gurbaxani has not put in his papers after the shareholders voted him out.
Mr Gurbaxani, too, is waiting for the RBI's decision on the issue, saying he was appointed by the Central bank.
Mr Gurbaxani chose to be silent when asked for comments by IANS.
Industry experts told IANS that though a bank is governed by the Companies Act and the Banking Regulation Act, the latter overrides the former in case of any conflict of provisions.
It has to be seen whether RBI will direct Dhanlaxmi Bank to call another AGM as per the provisions of the Banking Regulation Act. If this happens, the issue of shareholder democracy will also come into play.
There is already a view that the RBI seems to be micro-managing Dhanlaxmi Bank by directing it to remove a former chief general manager appointed as an adviser.
Mr Gurbaxani was appointed as MD and CEO of the bank for a period of three years from 27 February 2020.
The ordinary resolution moved for Mr Gurbaxani's appointment was defeated with 90.49% of the votes polled against the proposal as per the regulatory filing. Only 9.51% of the votes were polled in favour of his appointment.
Of the 10 resolutions moved at the AGM, the shareholders had passed nine and defeated one.
This is the second private bank where the shareholders have voted against the appointment of the MD and CEO in recent days.
On 25th September, the shareholders of Lakshmi Vilas Bank (LVB) had voted out seven directors, including the MD and CEO, in the AGM. However, in the case of LVB, RBI had asked the Directors to form a CoD on the same day.
RBI on 28 September 2020 had appointed Dhanlaxmi Bank's general manager at the Bengaluru regional office DK Kashyap as an additional director of Dhanlaxmi Bank for a period of two years.
However, in a letter to RBI governor Shaktikanta Das, the general secretary of the All India Bank Employees' Association (AIBEA) CH Venkatachalam said it is hoped the move will strengthen effective monitoring and control by RBI over the affairs of Dhanlaxmi Bank.
Mr Venkatachalam also suggested to Mr Das that while appointing a new MD and CEO for Dhanlaxmi Bank, RBI should keep the entire background and context in view and select a person who is familiar with the bank, its customers, depositors and shareholders as well as over nine decades of its existence.
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.