South Indian Bank’s MD and CEO Murali Ramakrishnan has decided to not seek reappointment for a second term, instead choosing to step down post the end of his term in September 2023.

The decision has been taken due to personal reasons and has the full support of the board, he said in a media address on Wednesday. The private sector lender notified the exchanges of the same on Tuesday evening.

Shares of the bank tanked at open today, falling 16.9 per cent to touch an intraday low of ₹13.75 on the NSE. They later pared some losses to close 12.7 per cent lower at ₹14.45.

On the hunt

Meanwhile, South Indian Bank’s board has initiated the process of looking for his replacement, by hiring leadership advisory firm Hunt Partner and other partners, which will evaluate both internal and external candidates for the position.

The search agency was appointed on Tuesday, and the board and the Nomination and Remuneration Committee (NRC) are working closely for a rigorous process to look at competent individuals, Ramakrishnan said.

The bank aims to find the replacement by June, so that the new MD has at least three months to work concurrently with Ramakrishnan to ensure a seamless transition and understanding of the initiatives taken by the bank over the past few months, Chairman Salim Gangadharan said.

There is perfect harmony between the board’s thought process and the strategic initiatives, and the bank is on the right path of selecting the new candidate, he said, adding that for a new appointment the RBI’s approval needs to be sought four months prior to the appointment.

‘Temporary reaction’

Dismissing concerns of a disruption in business activity, Ramakrishnan said that the changes undertaken pertain to the structuring of assets and liabilities, and transforming the way sourcing, underwriting, and monitoring are done--which are all structural changes and are already boosting the banks’ financials.

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Asked about the stock reaction to the news, Ramakrishnan said that the market reaction is “temporary” and most likely due to apprehension regarding unanswered questions such as who the next leader will be and whether they will be able to take the bank forward.

As they continue to see an improvement over the next two quarterly results, and the bank is also able to communicate that the initiatives undertaken are long-term changes for the better, market players will see that the bank is fundamentally strong and bounce back, he added.

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