Voted out by shareholders at the September 30 annual general meeting, Dhanlaxmi Bank’s Managing Director and CEO Sunil Gurbaxani has quit but said a probe is warranted into his ouster, denying charges of supporting a “north lobby” to take over the Kerala-based bank.
Gurbaxani put in his papers after the appointment of the committee of directors (CoD) became official. On October 1, the RBI appointed a three-member committee to run day-to-day operations till a new CEO is appointed. G Subramonia Iyer will be the chairman with G Rajagopalan Nair and PK Vijayakumar as the committee members.
“How a handful of shareholders who recommended my appointment have gone against without any clear indication smells foul. The issues deserve an investigation—what went wrong? On whose behest the shareholders voted against me?” Gurbaxani said in an exclusive conversation with Moneycontrol.
Gurbaxani took over as CEO in February 2020. The veteran banker has 35 years of experience with the State Bank of Bikaner & Jaipur (now State Bank of India) and Axis Bank.
“Shareholders never conveyed any reason or gave any clue about their displeasure to me. The issues that led to my ouster needs to be investigated by the respective authorities,” he said.
“I have quit and I respect what shareholders have decided. I go out with my head held high, with dignity and self-respect. It is the cost I’m paying for being a professional without any bias or prejudices.”
The banker said three of the four stakeholders –the depositors, employees and regulator—were happy with his performance, governance and professionalism shown in the last six months.
“Data suggests how my six months in the bank were better than six years in the past,” Gurbaxani said.
Gurbaxani said the allegations against him supporting a “north lobby” by soliciting investments from north-based investors and opening branches in the northern part of the country were baseless.
“These rumours are totally baseless far away from the truth. As a matter of fact, we were consolidating and closing the branches in the north on a cost-effective basis. No discussion has ever happened on investments from such a lobby in the bank. No such lobby exists,” Gurbaxani said.
A section of the shareholders had alleged that Gurbaxani was backing a so-called northern lobby to facilitate a takeover of the bank and lose its “Kerala identity”. This is believed to be the major reason why shareholders were unhappy with him.
Earlier, the RBI appointed DK Kashyap, General Manager, Reserve Bank of India, as the additional director on the board for two years. The central bank now has two members on the Dhanlaxmi Bank board.
In the last few months, Dhanlaxmi has witnessed several senior level exits. In June, three members of the board, including the chairman, quit due to differences with a section of shareholders but cited personal reasons for moving out.
On June 29, part-time chairman and independent director Sajeev Krishnan put in his papers though he had eight more months to go. The same day, KN Murali, independent director and G Venkatanarayanan, additional director, too, resigned.
Gurbaxani said Dhanlaxmi Bank needs a deeper surgery to resolve the long-standing governance issues. “The deeper governance issues in the bank need surgery and not a bandage solution. Issues that have been chronic for many years, the exit of many previous officials including MDs and part-time chairman speaks seriousness on the lack of governance and deserves investigation,” Gurbaxani said.
Differences at the top are not new for Dhanlaxmi Bank. A letter written by K Jayakumar, a former director, to the chairman after his resignation in April 2016, offers some clues.
Former and serving senior executives Moneycontrol spoke to said many of the points raised by Jayakumar, mainly the dominance of management over the board, still held. These differences could have played a role in recent exits, they said.
“I have lost faith in the capacity of this management and its ethos… I wonder why the initiatives approved by the Board and the several suggestions and admonitions of the RBI have repeatedly failed to yield the desired results. I am shocked by the abysmal lack of grace in dealing with difficult situations….,” said the letter, a copy of which is with Moneycontrol.
The letter also talked about ego clashes, human resources policies and governance issues.
“They (management) seem to presume that the directors have to be necessarily ‘yes men’. Any note different from ‘his master’s voice’ is unacceptable. ‘Dissent with dignity’ seems to be unknown in their lexicon. Once a Director (who is paradoxically called Independent Director!) is suspected to have different views, then he has to be sidelined if not humiliated,” Jayakumar said.“I am pained at the short-sightedness that fails to regard the commitment and contentment of the employees as paramount for the survival and success of the Bank in its darkest hour,” the letters said.