Watch experts decode 'The rise of ESG investing' on October 29 at 4pm. Register Now!
Last Updated : Oct 01, 2020 08:17 PM IST | Source: Moneycontrol.com

RBI appoints three-member committee of directors in Dhanlaxmi Bank

Moneycontrol first reported on Thursday morning that Dhanlaxmi Board has recommended a three-member committee of directors to the RBI.

Dhanlaxmi Bank (Image: Moneycontrol)
Dhanlaxmi Bank (Image: Moneycontrol)
  • bselive
  • nselive
Todays L/H

Thrissur-based Dhanlaxmi Bank on October 1 said the Reserve Bank of India has approved an interim arrangement for the formation of a Committee of Directors to oversee its operations till a new CEO comes.

The Board had requested the constitution of the committee after the MD and CEO’s appointment was rejected by the shareholders at the annual general meeting on September 30.

The Committee of Directors will be constituted with G Subramonia Iyer as Chairman and  G Rajagopalan Nair and PK Vijayakumar as Members, the bank said in a note to stock exchanges.


Moneycontrol first reported on Thursday morning that Dhanlaxmi Board has recommended a three-member committee of directors to the RBI.

As advised by RBI, the interim arrangement will not continue beyond four months within which the Bank will complete the process of identification and appointment of a new MD& CEO, the bank said.

At the AGM, over 90 percent of the votes were polled against CEO Sunil Gurbaxani’s appointment. According to persons familiar with the development, major shareholders of the bank were unhappy with Gurbaxani’s favourable approach to investors from the “north Indian lobby”. These shareholders, hence, wanted to oust Gurbaxani from the bank and bring in a more "fit and proper" candidate.

Gurbaxani assumed office as CEO in February 2020. A veteran banker, he has 35 years of experience with the State Bank of Bikaner & Jaipur (now State Bank of India), and Axis Bank.

Last week, after similar events at Lakshmi Vilas Bank, the RBI had appointed a three-member committee of directors to take care of daily operations. Shareholders had rejected appointments of seven directors including the CEO in LVB along with that of statutory auditors.

On Wednesday, after the AGM results came out, Gurbaxani told Moneycontrol in an exclusive chat that he will wait for the RBI’s direction before submitting the resignation.

“I have not resigned. I will wait for the RBI’s direction on the matter,” Gurbaxani said. Asked what the rules say in such a situation, Gurbaxani said that the Banking Regulation Act could supersede company law and the regulator can make a decision.

“Looking at the matter or the governance issues that are impacting the bank for years together, the regulator may take a decision which it feels appropriate,” Gurbaxani said, adding the RBI had not communicated anything to him on the matter so far.

Gurbaxani said the decision of the shareholders voting against him surprised him the most, adding that while he respects that decision, he would ultimately be driven by the central bank's decision.

“There are reasons that I would not disclose at this point of time. At times you do pay the price for being absolutely honest, candid and not allowing any sign of misgovernance,” Gurbaxani said.

On September 29, Moneycontrol first reported that a section of Dhanlaxmi Bank shareholders could vote against the CEO.

On Tuesday, the RBI appointed DK Kashyap, General Manager, Reserve Bank of India, Bengaluru Regional Office as Additional Director on the Board of the Bank for a period of two years. The RBI now has two members on Dhanlaxmi Bank’s Board.

Unions pitch for a better CEO candidate

In a second letter to the RBI this week, bank employees' union AIBEA asked the RBI to appoint a better candidate to head Dhanlaxmi Bank. “We strongly suggest and fervently hope that while appointing a new Managing Director and CEO, the RBI would keep the entire background and context in view,” said AIBEA General Secretary CH Venkatachalam in the letter. “The new MD & CEO would be someone who is familiar with this Bank, its customers, its Depositors, its shareholders and its nine decades of existence,” Venkatachalam said.
First Published on Oct 1, 2020 08:01 pm