LVB management expands search for new MD & CEO; to send names to RBI in one-and-half months

In the midst of completing its merger process with Clix group, private sector Lakshmi Vilas Bank (LVB) has broadened the search base for its new MD and CEO and is likely to send an updated list of candidates to RBI in about a month-and-half, a senior bank official said.

The South-based lender is searching for its next chief from across the industry, private as well as public sector, and has included more candidates now, member of its month-old Committee of Directors (CoD) Shakti Sinha said.

LVB had sent names of three candidates to the Reserve Bank of India (RBI) previously.

At its annual general meeting in late September, the shareholders of the bank had voted out seven board members, including the then MD and CEO S Sundar.

Subsequently, RBI appointed a three-member CoD comprising independent directors Meeta Makhan, Shakti Sinha and Satish Kumar Kalra.

"In the first round, we had done interviews of three candidates and sent names to RBI. But the Reserve Bank came back to us and asked whether the new management would like to reconsider the names. So we have started the process again. Now we are broadening our search with more candidates," Sinha told PTI.

Asked how many names the management will send to the RBI, Sinha said it is too early to say how many candidates they will be interviewing.

"The process is on, but it will take some time. Our aim is to do it as soon as possible, like say in one-and-half month," he added.

Sinha noted that appointing a new MD and CEO is a complex process, and right now, the merger with Clix group assumes more significance.

"For us, the merger issue has to be given the priority, as of now. CEO (selection) is a complex process, it is not something you can rush," he added.

"Normally, the appointment process for MD and CEO takes 6-9 months. We are trying to do it much faster. But right now, the major focus is on the Clix merger, which is being examined and negotiations are going on," he said.

He said finding the right candidates, checking their background and then sending the names to RBI for approval in itself is a long-drawn process.

In response to a question on how LVB is dealing with issues related to depositors' confidence, he said there were some tensions earlier but things are okay now.

"We are reaching out to all people that don't worry, everything is fine. Not just depositors, our borrowers are also important to us, we have to reach out to them as well," he said.

Asked about the time-frame to close the Clix deal, Sinha said the bank does not have any timeline but "obviously, we are under pressure as we were put under the PCA (Prompt Corrective Action) framework since September 2019... So, we don't have the luxury of time. We are trying to do it (Clix deal) as fast as possible." The bank was put under PCA because of rising bad loans and falling capital adequacy ratio.

The lender 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 latter's high exposure to the realty sector.

In June 2020, LVB inked a non-binding agreement with Gurgaon-based non-banking Clix Group for an amalgamation.

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

"We are taking action on our rights issue as well. Hopefully, we will be filing the papers for the rights issue very soon," Sinha said.

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.

The bank's gross non-performing assets (NPAs) jumped to 25.40 per cent of the gross advances as on June 30, 2020, from 17.30 per cent in the earlier quarter. Net NPAs too inched up to 9.64 per cent from 8.30 per cent.

In first quarter ended June of this fiscal, the bank reported narrowing of its net loss to Rs 112.28 crore as against Rs 237.25 crore in the same period of the previous financial year.

(To download our E-paper please click here. The publishers permit sharing of the paper's PDF on WhatsApp and other social media platforms.)

Free Press Journal