The Hindu Business Line : Federal Bank AGM likely to be stormy

THE annual general meeting of Federal Bank on September 27 is expected to witness a keen tussle among several contenders for the three seats falling vacant on the board of directors.

A new group, representing the interests of the bank employees, a large number of original shareholders and traditional customers has come to the fore. Representing them are Mr K.P. Fabian, the son-in-law of the founder of the bank, Mr K.P. Hormis, and Mr P.C. Cyriac, former Chairman of the Rubber Board, who have filed their nominations for board membership, keeping in mind the local content and local interest of the bank.

The group is opposing what it claims as the increasing role of ICICI Bank in the affairs of the bank.

The immediate provocation for the new group has been some controversial resolutions that will come up for the AGM's approval, a few employees have said. The resolution to bifurcate the current post of chairman into that of a non-executive chairman and the creation of an executive post of managing director would undermine the current authority and hierarchy of the bank. The bank's business volumes have grown from Rs 5,000 crore to Rs 20,000 crore under the current dispensation and there is no need for any change, they contended. "If it ain't broke, don't fix it," was Mr Fabian's terse comment.

Banking circles said that though ICICI Bank has 20.44 per cent stake in Federal Bank, its voting rights would be restricted to 10 per cent as per the RBI guidelines. The next big stakeholder is HDFC, with around six per cent, followed by UTI and then by a large number of smaller institutional stakeholders. None of these institutions is expected to exercise the proxies.

Some of the new contestants for a place on the board have taken seriousexception to the manner in which the board had tried to usher in people to the top posts in the bank — people who did not qualify for the same posts on two earlier occasions.

Mr Fabian contended that though an impression is trying to be created that ICICI Bank is doing all these with the blessing of the RBI, this is certainly not the case. It is not only the bigger banks that should survive, but smaller banks should also be permitted to survive to look after the interest of the smaller people living in rural India. Then only will the ideals and goals of the founder of the bank be attained, he said.

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