RBI offers LVB committee option to review CEO names proposed by old Board

The Reserve Bank of India (RBI) has asked the Lakshmi Vilas Bank's (LVB) three-member committee whether they would like to reconsider three names for the CEO post proposed by the old Board.

Shareholders of the bank in September voted against seven board members, including interim MD and CEO S Sundar, at the annual general meeting. Following which the RBI appointed a three-member committee of directors which would exercise the discretionary powers of the MD & CEO of the bank.

The Committee of Directors (CoD) comprise of independent directors Meeta Makhan, Shakti Sinha and Satish Kumar Kalra.

Sinha told Business Standard that the RBI has given an option to the committee whether they want to reconsider the three names.

The committee is now reviewing the three names proposed by old Board and also looking for a few more outside. The bank had sent three names, including one person from the Bank, to RBI for the post of MD and CEO. 

Meanwhile Sinha said merger and rights issues are the key agenda for the committee followed by the CEO appointment.

LVB has been struggling to raise capital for the last few years. 

A proposal of merger with non-banking finance company Indiabulls Housing Finance was rejected by RBI in 2019 because of its high exposure to realty sector. In June 2020, LVB inked a non-binding agreement with Clix Group for amalgamation. 

With the merger, the net worth of the bank will more than double to Rs 3,100 crore from the present Rs 1,200 crore. Clix Capital has a net worth of Rs 1,900 crore. 

In September, the bank's board had approved fund raising plans for Rs 1,500 crore and also to increase foreign shareholding to up to 74 per cent from 12.35 per cent.

Early this month Lakshmi Vilas Bank Board gave nod to raise up to Rs 500 crore through rights issue.