Shareholders of Thrissur-based Dhanlaxmi Bank on Wednesday ousted managing director and CEO Sunil Gurbaxani at the bank’s annual general meeting (AGM). This is the second such ouster of a private Bank chief executive in less than a week. Last week in a coup of sorts, around 60 per cent of the shareholders at Lakshmi Vilas Bank had voted against seven directors including MD & CEO S Sundar.
In the case of 93-year-old Dhanlaxmi Bank, over 90 per cent of the votes were polled against Gurbaxani’s appointment. The voting results were made public through stock exchange filings. Of the 10 resolutions, this was the only one which was voted against by the shareholders.
The approved resolutions include appointment of Gopinath CK, G Subramonia Iyer, Captain Suseela Menon R, G Rajagopalan Nair and PK Vijayakumar as directors.
Gurbaxani, a veteran banker, took over as CEO at Dhanlaxmi Bank in February 2020. A source said that Gurbaxani had proposed a preferential issue, which would have brought down the existing shareholders’ stake. This, along with the management proposal to open 25 branches in North India, resulted in the shareholders’ vote against the MD, the source said.
While Dhanlaxmi Bank faces governance issues similar to those in Lakshmi Vilas Bank, the financial profile of the Kerala-based bank is better. LVB is operating under the Prompt Corrective Action (PCA) provision.
Instead of consolidating the gains and strengthening the bank, an attempt was being made to change the business profile of Dhanlaxmi Bank, a section of the shareholders believes. Some of these shareholders are also employees of the bank.
However, shareholders backing Gurbaxani alleged that those voting against him were influenced by a senior official who was forced to resign by the Reserve Bank of India (RBI) recently.
A source close to the board said the voting against the MD & CEO was the culmination of a power struggle by majority shareholders. He added that the latest development could prompt RBI to intervene.
According to people familiar with the issues, while there’s no single promoter, a significant stake in the bank is held by a group of local businessmen.
Recently, D K Kashyap, general manager, RBI (Bengaluru Regional Office) was appointed additional director on the board of Dhanlaxmi Bank.
Since June, three board members of the bank had quit. On June 29, Sajeev Krishnan, part-time chairman and independent director, quit citing personal reasons. He had around eight months left in his term. K N Murali, independent director, and G Venkatanarayanan, additional director, too stepped down before the end of their tenure.
Following those exits, the bank had inducted P K Vijayakumar, G Rajagopalan Nair, G Subramonia Iyer and Suseela Menon R as board members.
T Latha had resigned as MD and CEO of Dhanalaxmi Bank in October 2019, within 15 months of taking charge, citing personal reasons. Her appointment was for three years.
Early this week C H Venkatachalam, general secretary, All India Bank Employees Association (AIBEA), had written to the RBI, raising concern over the state of affairs in the bank highighting its high cost to income ratio.