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New head
for Bharat Overseas Bank
Venkatachari Jagannathan
3 April 2000
G. Krishnamurthy, joint general
manager, the Vysya Bank Ltd, is likely to take over as the
chairman and CEO of the Chennai-based Bharat Overseas Bank
Ltd (BOBL).
Confirming the development, top-level sources say that Reserve
Bank of India (RBI) has given its nod favouring Krishnamurthy
from the list submitted by BOBL's board.
Now the ball is in BOBL's court, which has to draft the
terms of appointment for Krishnamurthy. The terms will have
to be okayed by RBI. According to sources, this process
is just a formality.
It is learnt that Krishnamurthy is inclined to join BOBL
only on deputation rather by severing his ties with his
parent bank, which incidentally holds a 14.66 per cent stake
in BOBL's equity. Interestingly, BOBL is owned by seven
banks - one nationalised and the rest, private banks. Besides
The Vysya Bank Ltd, the stakeholders include the Indian
Overseas Bank (30 per cent stake), The Bank of Rajasthan
Ltd (16 per cent), The Federal Bank Ltd (10.67 per cent),
The Karur Vysya Bank Ltd (10 per cent), The South Indian
Bank Ltd (10 per cent), and Karnataka Bank Ltd (8.67 per
cent).
 If
everything goes as expected, Krishnamurthy is expected to
take charge of the Rs 1,268 crore deposit-based BOBL during
the first or second week of April. By doing this, he will
also avoid signing the BOBL's accounts for the year ending
March 31, 2000.
The post of chairman and CEO in BOBL fell vacant when a
two-member division bench of Madras High Court upheld the
single judge's order setting aside the appointment of S.
Srinivasan to these positions at the bank. Consequent to
the judgement, Srinivasan was relieved immediately of his
position in early February. The process of selecting Krishnamurthy
to head BOBL was completed fast, thanks to the raps given
by the court on the knuckles of BOBL's board.
During the proceedings, when asked by the bench about the
steps being taken by BOBL's board to choose a successor
for Srinivasan, whose term as per his appointment order
was to expire on February 29, the bank's counsel replied
that the board is waiting for the final judgement on the
various writ appeals pending against Srinivasan's selection.
Castigating the board for this, the bench held that "we
are totally unable to accept or appreciate such an explanation.
Pendency of these writ appeals has nothing to do with the
setting up of a panel for appointment of a chairman for
the period commencing from 1st March 2000. Even if the bank
had any such doubts, it should have taken steps to get the
doubt clarified by taking out proper application before
the court..."
The interesting aspect of the selection process is that
the BOBL board, this time, decided to call for applications
for the chairman and CEO post only from the eligible candidates
of the shareholding banks. Last time, when Srinivasan was
appointed, the bank had called applications through a newspaper
advertisement and hired a private consultant for the purpose.
It was this open procedure which helped the All India Bharat
Overseas Bank Employees' Union to approach the court against
Srinivasan's appointment (see This appointment raised
eyebrows).
Would that be the reason for BOBL's board not approaching
the market for recruiting the bank's head? Refutes a top
level official, "Last time when the vacancy arose,
the bank decided to follow what other private banks were
doing -- going for market recruitment. Now the industry
trend is in favour of selecting a person within the banking
fraternity."
Be that as it may, the new chairman and CEO of BOBL has
a tough task ahead of him. He has to streamline the bank's
operations, mainly credit appraisals and loan waivers. But
his major job is to normalise the industrial relations which,
at present, is at the lowest ebb.
In this regard, the plus point for BOBL is its relatively
young work force,
including the union officer bearers. Meanwhile, it is learnt
that an RBI inspection team is inspecting BOBL's accounts
in the wake of the reference made by the bench in its judgement
on the complaints of financial irregularities.
List
of reports Bharat Overseas Bank
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