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A day after Spandana Sphoorty (SSFL) announced the appointment of Shalabh Saxena as its new Managing Director and CEO, IndusInd Bank raised objections to the appointment stating that Saxena is yet to resign from Bharat Financial Inclusion Ltd.
IndusInd Bank, which owns Bharat FI, said that as per the terms of the contract, Saxena cannot accept employment at a competitor of the microfinance company.
Under fire, IndusInd Bank begins review of microfinance subsidiary
The bank has also raised the red flag on the appointment of Ashish Damani as the President and Chief Financial Officer of Spandana Sphoorty because he is the Executive Director and Chief Financial Officer of Bharat FI (BFIL).
Review under progress
The bank said the two executives cannot be relieved from the services of the company until an ongoing review into the disbursal of nearly 84,000 loans without customer consent due to a technical glitch at BFIL is completed. “…the continued employment of Shalabh Saxena and Ashish Damani at BFIL is critical to the closure of such a process. Accordingly, they cannot be relieved from the services of BFIL, until completion of the said review,” IndusInd Bank said in a stock exchange filing.
Saxena was named as the CEO after SSFL’s founder and erstwhile Managing Director Padmaja Reddy stepped down due to differences with the largest shareholder on the valuation for a proposed stake sale deal with Axis Bank.
‘Not tendered resignation’
“Neither, Shalabh Saxena nor Ashish Damani have tendered their resignation from the services of BFIL. As per the terms of their employment, once the resignation is tendered, it is subject to acceptance by the board of directors of BFIL (board). Upon acceptance by the board, a specified notice period is also required to be served. However, as neither of them have tendered their resignations to BFIL, such due process has not been initiated,” IndusInd Bank said.
Further, it claimed that under the contractual terms of employment Saxena and Damani are also prohibited from accepting employment at a competitor of BFIL (such as SSFL), unless approved in writing by the board of BFIL.
“As stated above, as resignation from BFIL has not been tendered to the board by Shalabh Saxena and/or Ashish Damani, any purported acceptance by them of employment at SSFL would be in contravention of the terms of their employment with BFIL,” it said.
Spandana Sphoorty did not respond to an e-mail query from BusinessLine on the issue.
IndusInd Bank’s ‘technical glitch’: RBI examining portfolio as part of an ongoing audit
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