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Tamilnad Mercantile Bank (TMB) shareholder KV Mugundan has filed an appeal before the Madras High Court directing the Reserve Bank of India (RBI) to immediately remove any of the names from the panel for the appointment of CEO and executive director of TMB.
S Krishnan resigned as MD & CEO of the bank on September 28, 2023. Thoothukudi-based TMB submitted the names to the RBI on November 22, says the petition, a copy of which is available with Line of business.
“Notification has been ordered by the court; returnable by April 23,” Lakshman, the petitioner’s lawyer, told TV. Line of business.
The petitioner has also urged the court to pass an interim order directing the RBI to issue an appropriate directive to the bank so that the current MD & CEO (Krishnan) does not take any important decision having an impact beyond the date of his resignation or occupation of the position and until the disposition of the petition. He also urged the court to pass such orders as may be deemed necessary keeping in view the facts and circumstances of the case.
According to the petitioner, the RBI’s inaction beyond the prescribed 90 days is arbitrary and unreasonable.
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Furthermore, the continuation of the current CEO and CEO is contrary to the interests of TMB, its shareholders and depositors. The inaction is also palpably discriminatory against the TMB, its stakeholders, depositors and shareholders as the RBI acted well within the prescribed 90 days in the case of appointment of the new MD and CEO of two other private banks – the Kotak Mahindra Bank and DCB Bank.
The omissions and commissions of the current CEO and CEO have a direct impact on various businesses and business parameters of TMB. For example, its market capitalization has been declining for the past two quarters, making it more vulnerable to a takeover bid, especially considering its shareholders have been fighting hostile takeovers for the past three decades.
The Nomination and Remuneration Committee of the bank’s board should have ensured that the process of appointing the new CEO was completed within the stipulated period of 90 days.
With the petitioner having failed in his duty and being affected as a stakeholder/depositor and shareholder, a proper direction to the RBI is necessary, the petition said.
“The arbitrary inaction of the RBI even beyond the period prescribed by itself is the cause of the continuance of the current MD and CEO even after his resignation. The RBI did not take note of the hostile presence of the current MD and CEO at the helm of TMB affairs. If he is allowed to make important decisions that have a long-term impact beyond his resignation date, it will cause irreparable harm to TMB and its stakeholders/depositors and shareholders and therefore regulatory direction by the RBI,” the petition says. .