Karnataka Bank shares tumbled 5.61 per cent to ₹196.05 on BSE Monday noon following the resignation of its Managing Director & CEO Srikrishnan Hari Hara Sarma and Executive Director Sekhar Rao.

The board accepted Sarma’s resignation citing personal reasons, including his decision to relocate to Mumbai. His resignation becomes effective July 15, 2025. Executive Director Sekhar Rao also resigned, citing inability to relocate to Mangaluru and personal reasons, with his resignation effective July 31, 2025.

The bank has constituted a search committee to identify successors for both positions. Meanwhile, Raghavendra Srinivas Bhat has been appointed Chief Operating Officer effective July 2, 2025, and will be based at the head office in Mangaluru.

The leadership changes come amid regulatory scrutiny over expenditure incurred beyond delegated powers of whole-time directors. Statutory auditors highlighted ₹1.16 crore spent on consultants and ₹0.37 crore in capital expenditure that wasn’t ratified by the board, with the amount recoverable from concerned directors not reflected in accounts.

The bank stated that the auditor’s emphasis of matter has been “discussed and amicably resolved” and assured stakeholders of operational stability. It emphasised being well-capitalised and committed to continuing its transformation journey despite the leadership transition.

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Published on June 30, 2025