In a major development, the shareholders of Lakshmi Vilas Bank Ltd. rejected resolutions pertaining to apppointment of seven directors including its chief executive officer at the recently 93th Annual General Meeting, expressing unhappiness over the functioning of the bank.
On Sunday, the board held an emergency meeting with remaining directors to find a way forward to appoint a committee to name the next managing director in the place of S. Sundar, who stepped down after the AGM on Friday, to carry out the merger talks and raise the much needed funds among other issues.
The cash-strapped private sector has been struggling for the last two years without adequate funds and has been scouting for investors to bail it out. It was placed under Prompt Corrective Action framework by the RBI as most the key parameters turned negative. After a failed merger talks with Indiabulls Housing Finance, LVB managed to find a suitor and announced that it was likely to seal a deal with Clix Capital and the next step was to appoint a valuer.
However, this did not go well with the investors, who expressed their disappointment at the AGM by rejecting nine important resolutions concerning appointment and or reappointment of MD & CEO, three non-executive and non-independent directors and three non-executive independent directors, auditors and branch auditors.
Only three non-executive independent directors (Shakti Sinha, Satish Kumar Kalra and Meeta Makhan) could make it. Resolutions pertaining to increasing the authorised share capital, raising of capital, borrowing limits, and investment limit of NRIs and adoption of audited accounts were passed with absolute majority.
The public institutions (99% votes cast) and public non-institutional shareholders (62% votes cast) were against the resolutions for appointment of directors and auditors. The voting pattern shows that there is a split between promoters and promoters group.
Currently, the bank has four independent directors and two RBI nominees on the board.
As of March 31, 2020, LVB had a capital adequacy ratio of 1.12% against the RBI requirement of 8%. The lender’s tier I and II components of CAR stood at a negative 0.88% and 2%, respectively. It reported gross NPA of 25.40% and net NPA 9.64%. Net loss in the first quarter was ₹112.28 crore.
