Dhanlaxmi Bank Managing Director and Chief Executive Officer Sunil Gurbaxani, who was voted out by shareholders of the Thrissur-based bank at Wednesday’s annual general meeting (AGM), said he would wait for the Reserve Bank of India’s (RBI) decision before submitting his resignation.
“I have not resigned. I will wait for RBI’s direction on the matter,” said Gurbaxani in an exclusive chat with Moneycontrol. 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 is impacting the bank for years together, the regulator may take a decision which it feels appropriate,” Gurbaxani said.
He said the RBI had not communicated anything to him on the matter till now.
Over 90 percent of the shareholders voted against Gurbaxani’s appointment while a tad above 9 percent voted in favour.
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 RBI'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 Tuesday, Moneycontrol first reported that a section of shareholders could vote against the CEO.
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. The veteran banker 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, the All India Bank Employees' Union had written to the RBI seeking the regulator’s intervention in the bank. “We have already written to RBI. The RBI should remove the CEO in the backdrop of voting results and appoint and more fit and proper person,” said C H Venkatachalam, general secretary of AIBEA.
On Tuesday, the RBI appointed one of its officers on the Board of Dhanlaxmi Bank for a period of two years from September 28.
The RBI has appointed D K Kashyap, general manager, Reserve Bank of India, Bengaluru Regional Office as an additional director on the bank's board, 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 per cent). 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 the 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.