90 per cent of Dhanlaxmi Bank shareholders reject Sunil Gurbaxani as MD and CEO
NEW DELHI: In yet another banking sector coup, shareholders of Thrissur-based Dhanlaxmi Bank ousted the Managing Director and CEO Sunil Gurbaxani at the annual general meeting (AGM) of the bank on Wednesday.
Over 90 per cent of the shareholders voted against Gurbaxani's appointment apparently due to his alleged favouring of investors from North India.
The individual shareholders, many with roots in Kerala, were also reportedly concerned that the attempt to rebuild the image of the old generation private bank with a national focus, could erode its regional identity -- a potential problem since most of its business is dependent on local communities.
"...we learn that attempts are again being made to open more branches in the northern states, while the bank has inadequate infrastructure to manage the business in those areas," C H Venkatachalam, general secretary of All-India Bank Employees' Association had said in a recent letter to the RBI Governor, seeking his immediate intervention.
Gurbaxani assumed office as CEO in February 2020. The letter added that his appointment came after the previous top management had caused serious problems in the name of modernisation. But, now even the current management seemed to be headed in the "wrong direction".
This marks the second instance in less than a week where shareholders of private sector banks have ousted RBI-approved CEOs and directors. Just days ago, shareholders of the Chennai-based Lakshmi Vilas Bank (LVB) had ousted seven directors including MD & CEO S Sundar, as they were unhappy about the way the management function and the deteriorating financial situation of the lender.
Barring the CEO, Dhanalaxmi shareholders voted in favour of all other appointments proposed at the AGM. Over the last few months, the bank has seen a spate of exits with the first one being Sanjeev Krishnan, part-time chairman and independent director, who resigned in June with eight months of his term still remaining. Then, two other board members also quit - K.N. Murali and G. Venkatanarayanan.
Last week, the RBI had also written to the bank's Board seeking termination of a chief general Manager, P Manikandan. It was an unusual move for the regulator to intervene in the matter of a CGM-level officer. Meanwhile, the RBI appointed D K Kashyap, a general manager in its Bengaluru office, as additional director on the Board of the Dhanalaxmi on Tuesday.
In terms of financials, Dhanlaxmi has registered continuous profits for the last nine quarters and has a healthy capital position. Unlike cash-starved LVB, the bank's capital adequacy ratio stood at 13.94 per cent as on June 30, 2020, which was also above the regulatory requirement.