Mumbai: The board of Axis Bank Ltd, India’s third largest private bank by assets, will meet on 21 February to begin the process of identifying candidates for the posts of managing director and chief executive officer (CEO), and a non-executive chairman.
Following a Reserve Bank of India (RBI) directive, the bank will have to split the post of chairman and CEO. The term of P.J. Nayak, its current chairman and CEO, is ending on 31 July.
Many private banks, including Federal Bank Ltd, South Indian Bank Ltd, Karnataka Bank Ltd, Karur Vysya Bank Ltd, City Union Bank Ltd and Ratnakar Bank Ltd, recently split the top post at the regulator’s insistence.
Who’s next? Axis Bank chairman and chief executive officer P.J. Nayak’s term ends on 31 July. Ashesh Shah / Mint
The central bank wants banks to split the post of chairman and managing director in line with the recommendation of a panel set up in 2002 under the chairmanship of former Hindustan Unilever Ltd chairman A.S. Ganguly. The panel was in favour of splitting the top post in all large banks for the sake of better corporate governance.
However, RBI had made an exception for Axis Bank and allowed Nayak to continue to hold a combined position.
A member of the board said an existing director will most likely be made part-time chairman of the company.
According to him, the board’s priority is picking a CEO and managing director so that the executive can be nominated to the board and get acclimatized to the bank’s workings.
“Selecting a chairman is not our priority as the post of chairman needs to be filled only in August,” said this person, who didn’t want to be named because the proceedings of the board meeting are meant to be confidential.
Nayak has declined to be non-executive chairman.
“One of the names discussed by the nomination committee for the post of non-executive chairman is K.N. Prithviraj, administrator, the Specified Undertaking of the Unit Trust of India (SUUTI). The bank board will take a final decision,” the board member said. Prithviraj is the former chairman and managing director of New Delhi-based public sector bank Oriental Bank of Commerce.
SUUTI, created in 2003 to oversee the assured-return investment plans of the former Unit Trust of India, is the promoter of the bank and has the right to appoint the chairman, another board member said. “SUUTI, Life Insurance Corp. of India and General Insurance Corp. of India are stakeholders in the bank and will have a role in deciding the candidates,” the second person said.
The board will also consider the four executive directors of the bank for the position of managing director and CEO, but the director mentioned earlier said there could be some dissatisfaction if one of them was picked. These four are M.M. Agarwal, V.K. Ramani, S.K. Chakrabarti and Hemant Kaul.
“M.M. Agarwal is the senior-most executive director but as of now all the four executive directors hold a chance,” he said. “We will also look at outside candidates on the basis of reference.”
The nomination and remuneration committee has begun the process of shortlisting candidates, he added.
“The only disadvantage that the four executive directors have is that they are experts in their own business verticals and do not have enough cross-vertical working experience to head the overall organization,” he said.
ICICI Bank Ltd, India’s largest private sector lender, identified the successor of its current CEO and managing director K.V. Kamath in December, five months before he retires. The bank’s joint managing director and chief financial officer Chanda Kochhar will replace Kamath in May. Kamath will be the bank’s non-executive chairman, replacing N. Vaghul.