UTI Bank will seek the approval of its shareholders this Friday, for appointing P J Nayak, the incumbent chairman and managing director, as the executive chairman for a two-year period beginning August 1, 2007, even though the RBI reportedly wants the bank to have a non-executive chairman and a wholetime director as a managing director.
The RBI is expected to find it difficult to say no to clearing the appointment of Nayak as the executive chairman since the corporate governance norms do not say the chairman cannot be a wholetime director.
The norms only state that one person should not hold the position of chairman as well as that of the managing director of a private sector bank.
The RBI had earlier rejected the bank's proposal to give Nayak a two-year extension as the chairman and managing director.
Nayak, on his part, had preferred to retire rather than accept any truncated responsibility at the bank, which he has been heading since January 2000.
Analysts said UTI Bank has no choice but to ask Nayak to continue as the bank's problems would be compounded by the absence of a second rung of top managers who could immediately succeed him.
The shareholders, meeting on June 1, also have on their agenda the proposed change in the name to Axis Bank. The RBI has already approved the bank's proposal for changing its name to Axis Bank.
Though the approval of shareholders may be easy to get, the bank will have to work hard to convince the
Reserve Bank of India.