MC EXCLUSIVE Karnataka Bank likely to elevate new COO Raghavendra Bhat as interim CEO

Karnataka Bank

Karnataka Bank is likely to elevate newly appointed chief operating officer (COO) Raghavendra Srinivas Bhat as the interim chief executive officer (CEO), sources have told Moneycontrol.

He will stay in the role for six months or till a new CEO is appointed in place of Srikrishnan Hari Hara Sarma, sources added. Sarma, the managing director and CEO, resigned on June 29. His resignation takes effect from July 15.

Sarma cited personal reasons, including a decision to go back to Mumbai, as the reason for his exit.

Executive director Sekhar Rao, too, quit on personal grounds and inability to relocate to Mangaluru, where the bank is headquartered. The board has accepted the resignation, effective July 31.

The lender has set up a search committee to identify candidates for the positions of managing director & CEO and executive director.

For the interim, the lender has decided to appoint Bhat, who took over as the COO on July 2. Further substitute arrangements are underway, subject to regulatory approval, sources said.

The bank is yet to respond to Moneycontrol’s emailed queries. The story will be updated when the bank responds.

On June 28, Moneycontrol exclusively reported that Sarma had stepped over differences with Rao and the bank’s board on a certain expenditure incurred by the lender.

The differences are believed to have cropped up in May when the bank’s auditors highlighted a Rs 1.53 crore expenditure in connection with engaging a consultant and other purposes.

The expenditure is said not to have been ratified by the board. “Consequently, the said amount is recoverable from the concerned directors,” the auditors said. The consultancy expenses were incurred towards technology improvements and the revamping of credit verticals.

The auditors’ comments are said to have invited regulators' scrutiny. However, steps have been taken to address the issue, a source said. “Whatever had to be done is done,” the source said, adding the regulator is also aware of the action taken by the people involved.