Karnataka Bank is making headlines today—but not for the right reasons. The private sector bank saw its stock drop by nearly 6% after both its CEO and Executive Director announced their resignations. The twist? It all started over a ₹1.53 crore consultant bill.
On June 29, Karnataka Bank told the exchanges that CEO Srikrishnan Hari Hara Sarma and ED Sekhar Rao were stepping down. Sarma will leave on July 15, while Rao exits on July 31. The official reason given? Personal.
But dig a little deeper, and a different story unfolds.
According to a report by Moneycontrol, the resignations followed serious differences with the board over an expenditure decision. The issue? A ₹1.53 crore payout related to hiring a consultant—reportedly for tech upgrades and revamping the credit department.
The catch? This kind of spending required board approval. But that didn’t happen.
In May, the bank’s statutory auditors flagged the expense in their report, saying it went beyond the powers of the bank’s whole-time directors. They even added that the money is “recoverable from the concerned directors.” That’s a strong statement.
The audit note apparently triggered regulatory interest, raising pressure on the top leadership. While insiders say corrective action has already been taken, the damage seems to have been done. The boardroom conflict made Sarma—an experienced banker with 40+ years under his belt—decide to step away just a year into his three-year term.
To put this in context, Sarma was Karnataka Bank’s first external CEO, appointed in May 2023 after a formal executive search. His selection had marked a new era for the century-old bank. Now, that change seems to have hit a wall.
At 9:30 AM on June 30, Karnataka Bank shares were down 5.8%, trading at ₹195.78 on the NSE. Investors are clearly spooked.
While one insider told media outlets, “Whatever had to be done is done,” questions still remain: How did such a major expense fly under the radar? Why didn’t the board act sooner? And most importantly—what’s next for Karnataka Bank?
For now, the bank is facing reputation risk, leadership gaps, and shareholder nervousness. It’ll need strong and transparent action to rebuild confidence.
Disclaimer:
This article is for informational purposes only and is not financial advice. Please consult a certified advisor before making investment decisions.
Also Read Slice Now Matches HDFC in Bank Account Openings – But Without the Legacy Baggage
