Shareholders of Thrissur-based Dhanlaxmi Bank have ousted the Managing Director and CEO, Sunil Gurbaxani, at the annual general meeting (AGM) of the bank on Wednesday.
Over 90 percent of the votes were polled against Gurbaxani’s appointment, according to people familiar with the development.
On Tuesday, Moneycontrol reported that a section of shareholders could vote against the CEO, Sunil Gurbaxani.
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 feared that the bank would lose its Kerala identity and, 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.
The shareholders' move is significant since the removal of an RBI-appointed CEO is rare and could lead to a management crisis. Recently, bank employee union, AIBEA, had written to the RBI seeking the regulator’s intervention in the bank. “We have already written to the RBI. The RBI should remove the CEO in the backdrop of voting results and appoint a more fit and proper person,” said C H Venkatachalam, general secretary of AIBEA.
On Tuesday, the Reserve Bank of India (RBI) appointed one of its officers on the Board of Thrissur-based Dhanlaxmi Bank for a period of two years from September 28, the bank informed the stock exchanges.
The RBI has appointed D K Kashyap, General Manager, Reserve Bank of India, Bengaluru Regional Office, as Additional Director on the Board of the Bank, the lender said
As of March 2020, prominent investors in the bank include B Ravindra Pillai (10 percent), Gopinathan C K (7.5 percent) and Kapilkumar Wadhawan (5 percent). Foreign portfolio investors hold 11.4 percent.
Last week, the RBI had written to the bank's Board seeking termination of a key executive—one chief general Manager, P Manikandan.
It was an unprecedented move for the banking regulator to intervene in the matter of a CGM-level officer. But the regulator was upset about the non-adherence to the highest standards of corporate governance and Manikandan’s alleged involvement in board matters, according to persons familiar with development. The RBI had received complaints against this officer, they said.
The RBI was alerted by a series of exits from Dhanlaxmi’s Board since June. The first one was on June 29 when Sajeev Krishnan, part-time chairman and independent director, quit. Krishnan had joined the Kerala-headquartered bank in February 2018 for a three-year spell. He had around eight months left in his term.
The other two were KN Murali, independent director, and G Venkatanarayanan, an additional director. Both resigned with effect from June 29, 2020, before their terms came to an end. Murali joined the bank nearly a year and a half ago while Venkatanarayanan joined only a few months ago.
Following these exits, the bank had appointed new Board members. These include PK Vijayakumar, G Rajagopalan Nair, G Subramonia Iyer and Suseela Menon R, also as additional directors (Independent Category) to the Board.
Shareholders voted in favour of all other appointments at the AGM.
Last week, Lakshmi Vilas Bank shareholders ousted seven directors including the interim CEO and statutory auditors. Shareholders were unhappy about the way the Board and the management function and the deteriorating financial situation of the lender. Following this, the RBI appointed a three-member committee of directors to oversee the daily functions of the bank.
Dhanlaxmi Bank posted a 69 percent decline in net profit at Rs 6.09 crore for the first quarter ended June 2020 due to higher provisioning.
The bank had registered a net profit of Rs 19.84 crore during the same quarter of the previous fiscal.
On a sequential basis, however, its net profit in the quarter under review increased from Rs 2.6 crore in the March 2020 quarter.
Total income during April-June 2020 increased to Rs 278.62 crore from Rs 256.75 crore in the year-ago period, the lender said in a regulatory filing.