The Reserve Bank of India has appointed two of its senior officials on the board of Lakshmi Vilas Bank (LVB), apparently to safeguard the interest of depositors.
The RBI has appointed R. Ravi Kumar and Ashok Narain, general managers in the central bank, as additional directors of the private bank as per Section 36AB(1) of the Banking Regulation Act, 1949, the bank said in a filing to the BSE.
Terming the appointment of additional directors as “routine in the banking industry,” an LVB spokesperson said the bank felt it was a routine regulatory oversight and the bank welcomed the appointment of the additional directors.
In the past also, LVB had RBI-appointed directors on its board, the spokesperson added.
Section 36AB(1) states that if the RBI is of the opinion that in the interest of the banking policy or in the public interest or in the interests of the banking company or its depositors, it is necessary so to do, it may, from time to time appoint one or more persons to hold office as additional directors of the banking company.
Last month, the bank’s regular CEO and Managing Director P. R. Somasundaram had resigned. According to sources, the resignation was on account of a rift between him and the key promoters on governance issue.
The RBI has asked the promoter group to lower its stake to 10 per cent by December. As per the information available at the exchange, the promoter group’s stake stands at 11.10 per cent as on September.