Lakshmi Vilas Bank shareholders vote against reappointment of top brass

RBI approved a Committee of Directors, composed of three independent directors, who would run the day-to-day affairs of the lender

A large section of shareholders of ailing Lakshmi Vilas Bank (LVB) voted against the reappointment of the managing director and chief executive, as well as seven directors and auditors, at the recent annual general meeting (AGM).
 

In a latest development, the Reserve Bank of India (RBI) approved a Committee of Directors (CoD), composed of three independent directors, who would run the day-to-day affairs of the lender.
 

This CoD will exercise the discretionary powers of MD & CEO in the ad-interim and is composed of Meeta Makhan - Chairperson of the Committee of Directors, Shakti Sinha - Member and Satish Kumar Kalra - Member.
 

With Liquidity Coverage Ratio (LCR) of about 262 per cent as on September 27, 2020, against minimum 100 per cent required by the RBI, the deposit-holders, bond-holders, account-holders and creditors are well safe-guarded, said bank.
 

Close to 60 per cent of shareholders voted against the resolutions seeking the reappointment of interim Managing Director (MD) and Chief Executive Officer (CEO) Sundar, and seven independent directors. Some said they were unhappy with the way the bank was managed, and with the deterioration in finances.
 

Among the non-independent directors voted out was K R Pradeep, one of the promoters. He held a 2 per cent stake in the bank as of June 30, according to a BSE filing.

LVB filed the voting results with the BSE over the weekend. Resolutions not passed include the reappointment of Sundar, as well as the reappointment of independent directors N Saiprasad, Gorinka Jaganmohan Rao, Raghuraj Gujjar, K R Pradeep, B K Manjunath, and Y N Lakshminarayana.
 

Shareholders cleared the appointment of only three directors — Satish Kumar Kalra, Shakti Sinha, and Meeta Makhan. In addition, there are two Reserve Bank of India (RBI)-appointed directors on the board.

They also voted against reappointment of statutory auditors (P Chandrasekar LLP, Chartered Accountants) and branch auditors. Institutional Investor Advisory Services had recommended voting against the reappointment of Gujjar, Saiprasad, Pradeep, and Manjunath, but not against Sundar’s reappointment.

The development comes amid LVB’s impending merger deal with AION-backed Clix Capital (founded by Pramod Bhasin), and when the lender is in the process of raising capital. It will continue the process of considering and evaluating the proposed amalgamation of Clix Group with the bank. The mutual due diligence work is in advanced stages, it said in the statement.
 

The bank was on Srei Capital’s radar, and had almost struck a deal with Indiabulls Housing Finance before the RBI objected.

This could be the first case to be resolved under the amended Banking Regulations Act, which empowers the RBI to explore reconstruction or amalgamation of a bank, without imposing a moratorium. LVB has been under the RBI’s prompt corrective action framework since September 2019, given its weak credit profile, high level of bad loans, low capital, and losses. It faces curbs on lending to corporates as well as stressed and high-risk sectors.