In a startling disclosure, Sunil Gurbaxani, the ousted MD and CEO of private lender Dhanlaxmi Bank, has claimed that he was told to quit much before the private sector lender’s recent annual general body meeting (AGM) .
Gurbaxani was ejected from his job last week when shareholders threw out a resolution pertaining to his appointment at the AGM.
In a telephone conversation with this correspondent, the former bank chief said that he couldn’t fathom the reason for such a threat. He, nevertheless, indicated that there were some governance issues within the bank.
In interviews with other financial newspapers, Gurbaxani has said the threat came to him in person from “two directors”.
Without elaborating, he said that he stood his ground – a move that Gurbaxani hints may have angered a section of the owners. In response to a question, the ousted CEO said that his appointment was cleared by the same set of shareholders a few months ago and also had the blessings of the Reserve Bank of India.
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What went wrong in the meanwhile? Well, Gurbaxani wanted the RBI and Registrar of Companies (RoC) to take cognisance of developments in the bank.
“They should intervene,” he said, questioning the way that 0.05% of the shareholders chose to decide on the fate of an institution.
It requires an investigation by the RBI and RoC, he added.
But the general-secretary of the All-India Bank Employees’ Association (AIBEA), C.H. Venkatachalam does not buy Gurbaxani’s arguments.
“If it is true that he was threatened, why did he not complain to anyone at that time. These are only cover ups to hide his defeat in the annual general body meeting. The fact is that shareholders did not want him and did not like his policies. He should know the difference between Dhanlaxmi Bank and Axis Bank. Dhanlaxmi Bank has its own DNA. If somebody disturbs it, such a reaction is bound to be there from shareholders. A cat cannot become a tiger,” he said.
Last week, the shareholders voted out a resolution pertaining to the Gurbaxani’s appointment. However, all other resolutions were cleared by them. Strangely enough, a North-South divide appears to be playing out in the unfolding drama at Dhanlaxmi Bank.
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Gurbaxani, industry insiders and Dhanlaxmi Bank sources allege, was viewed as an outsider who failed to comprehend the strong South Indian roots of the bank.
He was accused of leading the bank into a wrong direction, much to the chagrin of the long-serving shareholders of the bank, which has an identity of its own which is strongly rooted to its Kerala origin.
The Dhanalaxmi Bank imbroglio has now spilled over into the public domain with its former CEO coming out in open to allege that he was threatened by unnamed persons to quit. Surely, the issue is bound to escalate. The central bank must step in to stem the issue from sliding down further into un ugly course.
Private lenders – especially from the southern part of India – have been in the news of late for all wrong reasons. For too long, the peculiar nature of their shareholdings has sort of hindered their smooth progress. Far from aiding their growth, their shareholding structures have been a cause for avoidable publicity of negative kind. The regulator will do well to fix the malaise afflicting these private lenders of the older generation kind.
K.T. Jagannathan is a senior business journalist.
