Chennai's LV Bank is in a worried state. For the first time in the history of any bank in India, stockholders of Chennai-based Lakshmi Vilas Bank removed seven directors and accountants at the bank’s Annual General Meeting (AGM) on September 25. This also incorporated the recently appointed RBI-approved MD and CEO S Sundar, leaving the 94-year-old bank headless. This is being promoted as an unusual revolt by shareholders, never seen before in India’s banking history. Certain reports also quote the incident as a ‘dramatic shareholder coup’, that has now left the bank without a promoter or a CEO.
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A section of stockholders, mainly institutional shareholders, were extremely troubled with the mismanagement and lack of administration at the bank that has been grappling with losses and deteriorating deposits and hence rejected resolutions seeking the appointment of the seven directors. This was N Saiprasad, non-executive & nonindependent director; Raghuraj Gujjar, non-executive & non-independent director; Gorinka Jaganmohan Rao, non-executive & non-independent director; KR Pradeep, non-executive & non-independent director; BK Manjunath, non-executive & independent director; YN Lakshminarayana Murthy, non-executive & independent director.
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The remaining directors of the bank then held an emergency meeting on Sunday to figure out a way forward, not only to find the next MD and CEO but also to discuss proposing funds, something the bank is in dire need of. Left leaderless, the Reserve Bank of India then approved that day-to-day affairs of the bank be run by a Committee of Directors (CoD) composed of three independent directors, who will exercise the discretionary powers of MD and CEO in the ad interim.