On September 26, the Lakshmi Vilas Bank’s annual general meeting (AGM) threw up a surprise. For the first time in the annals of Indian banking, the entire set of board members, seven of them – that is the non-executive, non-independent members - were voted out, were not given approval for continuation by the shareholders.
The managing director, S Sundar, as well the promoter, KR Pradeep, and people long associated with him. It clearly was the set of people who have been running the bank so far who have been rejected by the shareholders.
What went wrong and is the RBI indulging in brinkmanship by allowing the situation to continue? Or going by the reaction of the market – the RBI was wise in letting the private sector group, that has thrown its hat in the ring, to come to an understanding with Lakshmi Vilas Bank. Which of the RBI’s decisions will ultimately turn out good?
Former non-executive chairman of the Bank of India (BoI) G Padmanabhan and professor of finance at SPJIMR Ananth Narayan discussed this in detail.