In yet another instance of investors’ activism, Dhanlaxmi Bank’s chief executive officer and managing director was voted out at the lender’s annual general meeting on Wednesday.
As part of a routine regulatory process, the Reserve Bank of India (RBI) had in February approved the appointment of Sunil Gurbaxani for three years as MD and CEO.
“The shareholders have not approved the resolution for the appointment of Sunil Gurbaxani as MD and CEO of the Bank,” the Kerala-based lender said in a regulatory filing. It did not give any reasons for the CEO's ousting.
A whopping 90.49% of the shareholders opposed the appointment of Gurbaxani. Out of the total 8.01 crore votes, 76.21 lakh votes were in favour, while 7.25 crore votes went against the proposal of approving Mr Gurbaxani's appointment at the virtual 93rd AGM of the bank on September 30.
However, the shareholders approved the appointment of the rest of the five board members.
In a separate statement, the bank said that the RBI has approved an interim arrangement for formation of a committee of directors to exercise the powers of MD and CEO until a new chief takes charge.
The committee will be constituted with G. Subramonia Iyer as chairman and G. Rajagopalan Nair and PK Vijayakumar as members. The interim arrangement will not continue beyond four months within which the bank will complete the process of identification and appointment of a new MD and CEO.
Gurbaxani’s ouster comes a week after shareholders of Chennai-based Lakshmi Vilas Bank rejected the reappointment of seven directors including the CEO and MD S Sundar amid governance and asset quality issues.
Gurbaxani has over 35 years of experience working with the State Bank of Bikaner & Jaipur (now State Bank of India), and Axis Bank.
Over the past few months ahead of the AGM, Dhanlaxmi Bank saw a spate of resignations including that of its part-time chairman and independent director Sanjeev Krishnan.
Krishnan resigned June-end, eight months before his term expired. The bank said he cited personal reasons as his decision to quit. Two other board members had also quit at the same time — KN Murali and G Venkatanarayanan.
Following the resignations, on September 28, the Reserve Bank of India appointed its nominee, D K Kashyap, general manager of the bank, as director for two years.
As of June 2020, prominent individual investors in the bank include B Ravindran Pillai (10% holding), Gopinathan C K (7.5%) and Kapilkumar Wadhawan (5%).
Bengaluru-based Agnus Ventures LLP owns 8.52%, foreign portfolio investors hold 11.4% while Niche Financial Services Pvt Ltd owns 3.16% stake in Dhanlaxmi Bank.
People in the know said the new work culture brought in by Gurbaxani led to dissatisfaction among many employees and shareholders. Many feared Gurbaxani’s approach of favouring north Indians and style of work would dent the southern identity and health of the Thrissur-based bank.
The All India Bank Employees’ Association (AIBEA) said employees and shareholders were not happy with the way Dhanlaxmi Bank was being run under the new CEO.
"A shareholder wrote to us about 10 days ago that the new CEO is trying to expand and build up modern policies while this is a conservative regional bank. He wanted unlimited power to get his set of people and hire 500 professionals on high salaries... This was unacceptable for a small south India-based regional bank," CH Venkatachalam, AIBEA's general secretary, told VCCircle.
Let the cat remain a cat, you can make it into a healthier and stronger cat but do not try to make it into a tiger, he added.
The association represents about 500,000 bank employees across India, including those from Dhanlaxmi Bank.
Dhanlaxmi Bank is a small private-sector Indian lender with 247 branches and a total deposit base of Rs 11,109 crore ($1.51 billion).
