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Dhanlaxmi Bank CEO case to test primacy of RBI over banks' shareholders

The removal of CEO Sunil Gurbaxani has led the private banking system into uncharted waters

Dhanlaxmi Bank

The larger context in which the BR Act versus Companies Act debate (if it were to be posited as such) has to be seen is that a bank is unique by virtue of it being the custodian of public trust (read deposits)

Raghu Mohan Mumbai
The removal of Sunil Gurbaxani from the corner room at Dhanlaxmi Bank in a shareholder coup has led the private banking system into uncharted waters. Should the Reserve Bank of India (RBI) go along with what a bank’s shareholders deem fit by exercising their rightunder the Companies Act? Or should it reinstate a helmsman (in the immediate instance Gurbuxani) to underscore its powers, and the primacy of the Banking Regulation Act (BR Act: 1949), if it were to feel otherwise?

The BR Act vests the banking regulator with the powers to appoint “the chairman of the Board of Directors (BoD) on

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First Published: Nov 18 2020 | 6:10 AM IST

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