Axis Bank drops move for board slot to Bhansali

Axis Bank has withdrawn its proposal to induct Vallabh Bhansali, co-founder and chairman of Enam Securities, on the board, following the Reserve Bank of India’s (RBI’s) discomfort.

In November last year, Enam sold its investment banking, institutional and retail equity businesses to the bank. Bhansali’s induction on the board as an independent director was part of the deal.

RBI, however, expressed discomfort with the quid pro quo when Axis sought regulatory clearances for merging Enam’s arms with itself.

Sources say though RBI does not favour Bhansali’s induction at this point in time, he can become a member of the bank’s board later.

“The regulator raised the issue of the quid pro quo arrangement – in which Axis buys Enam’s arms and in lieu, among other things, Enam’s promoter gets a seat on the board. As a result, Axis withdrew the proposal,” said a banking industry source.

Axis Bank did not respond to an email seeking clarification. Bhansali declined comment. “I have no comments on the issue, as clearance for the deal is awaited from the regulator,” he said.

Last year, Axis Bank entered into an agreement to buy Enam’s investment banking and equities businesses in an all-stock deal valued at Rs 2,067 crore. The deal was expected to close within six months.

Under the deal, Enam will demerge its investment banking, institutional equity, retail equity and related businesses such as distribution of financial products to a wholly-owned subsidiary of Axis Bank. Manish Chokhani has been named the managing director and chief executive officer of the new entity.