Lakshmi Vilas Bank to send two more names to RBI for top post, favours local CEO

Troubled lender Lakshmi Vilas Bank (LVB) will recommend to the Reserve Bank of India (RBI) two more candidates for the post of MD & CEO. Interviews will be completed by November, persons in the know indicated. The bank had earlier sent a list of three candidates, but the RBI had allowed it to add more names to the list.

Shakti Sinha, independent director and part of the three–member committee of directors approved by the RBI to run day-to-day operations at cash-starved LVB, told FE the lender will be conducting interviews to find more suitable candidates.

“At least, we will find two candidates. Headhunters have promised us to complete the process in two weeks and by November-end, we will be able to submit the list to the RBI for further action,” Sinha said.

Sources close to the development told FE that the current board is not happy with the selection of three candidates undertaken by the earlier board. “The new board had held talks with those candidates and they now feel that they don’t fit the bill as the bank needs a strong CEO & MD with leadership qualities to bring the lender out of the current situation,” the sources said.

They said since LVB is a Tamil Nadu-based bank, the management believes that the new MD and CEO should be comfortable with the state’s milieu. “The management now realises that sending a smart banker from north India, Mumbai or Bengal will not help.”

On the rights issue, Sinha said the bank is readying all the papers. “Our merchant banker is on the job and will come back with its recommendations. Following that, we will decide on the ratio and the amount.”

On the merger process, Sinha said LVB and Clix are in the process of exchanging documents, and across the table negotiations will start by the next week.

LVB on October 8 received an indicative non-binding offer from Clix Group, moving a step closer to the amalgamation of the group’s entities with itself.

Sources, however, said the Clix side has been seen making hard bargaining over the contours of the deal. Clix wants LVB to make full provisions against contingent liability of Rs 720 crore related to transactions involving former Religare promoters Malvinder and Shivinder Singh, pointing out that bank will have to return the money if it loses the case against RFL. “LVB believes that there is no need to maintain full provisions. The management has apparently told Clix that it can examine the accounts which have gone through forensic audit,” they said.