Lakshmi Vilas Bank Crisis – shareholders vote against reappointment of seven directors
LVB HAS BEEN placed under prompt corrective action (PCA) by the RBI. As it was struggling to get out of PCA, it drew an unparalleled ire from the shareholder community. They threw out resolutions relating to the appointment of seven directors at the annual general body meeting late last month. In the process, they also voted out S Sundar, who was appointed interim managing director and CEO at the beginning of this year.
There were a series of missteps at LVB. First was the effort to merge the bank with Indiabulls Housing Finance. But the banking regulator put paid to this proposal. All of a sudden, LVB saw its MD and CEO Parthasarathi Mukherjee quitting. In the meanwhile, there were also speculations on Srei Capital showing interest in the bank. Prior to the extraordinary shareholder activism, the bank consistently put out reports suggesting that it was on the lookout for a co-partner to run it.