MUMBAI : The Reserve Bank of India has declined to approve the re-appointment of Federal Bank managing director and chief executive Shyam Srinivasan following the end of his term this year.
Srinivasan’s three-year term is scheduled to end on 22 September, when he will complete 14 years as the bank’s MD and CEO, during which he’s reputed to have transformed the bank’s operations.
RBI has asked Federal Bank to recommend the names of at least two executives for appointment to the top position, the bank said in a stock exchange notification on Friday.
“… the bank is advised to submit a fresh proposal containing a panel of at least 2 fresh names, in order of preference, for appointment as MD & CEO of the bank having regard to the likely tenure of the candidate and longer term requirements of the bank,” the regulator said in a letter dated 4 January, which was attached with the bank’s notification.
Federal Bank said it had written to RBI 6 October seeking a one-year extension for Srinivasan.
The regulator, under its corporate governance guidelines issued in April 2021, has capped the tenure of incumbent bank managing directors and chief executives at 15 years.
“In our view this is not a negative development. The hangover of the change in management will be behind us as the board will now be forced to search for a replacement,” said Asutosh Mishra, head of institutional equities research at Ashika Stock broking.
“Srinivasan has done a good job in transforming this bank and the board will have to find a suitable candidate to ensure continuation of the performance,” Mishra said.
Srinivasan is among a few bankers who chose to move to smaller Indian banks after long, successful stints with foreign banks. Under his tenure, Federal Bank has changed its image of an old-generation private lender to a digital-friendly private bank with national focus.
The bank’s total business touched ₹4.25 lakh crore at the end of September, and its market cap hit ₹37,608 crore at the end of Friday’s trade. The shares ended the day nearly unchanged on NSE at ₹154.40 apiece.
In November, NDTV Profit had reported that Federal Bank had begun succession planning and was considering elevating executive director Shalini Warrier to the post of deputy managing director.
Last year, RBI allowed a three-year extension for City Union Bank MD and CEO N Kamakodi till May 2026, which coincides with the end of his full 15-year term.
Kotak Mahindra Bank’s MD and CEO Uday Kotak stepped down last year four months before the end of his term.
RBI, which was given a choice between an internal candidate and an external candidate for the top post at Kotak Mahindra Bank, opted not for the frontrunner KVS Manian but for Ashok Vaswani, who is perceived to be a global banker.
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Published: 05 Jan 2024, 08:10 PM IST