KARNATAKA BANK MD AND ED RESIGNS OVER AUDIT RED FLAGS FOR SPENDING WITHOUT BOARD’S APPROVAL

KARNATAKA BANK MD AND ED RESIGNS OVER AUDIT RED FLAGS FOR SPENDING WITHOUT BOARD’S APPROVAL

REASON FOR RESIGNATION

On Sunday, June 29, 2025, Karnataka Bank's Managing Director & CEO, Srikrishnan Hari Hara Sarma, and Executive Director, Sekhar Rao, resigned.

A small amount of Rs 1.16crores spent towards consultancy fee beyond the delegated powers of the MD and not ratified by the board is the cause for resignation.

The resignation letter says reason is " personal and decision to relocate to Mumbai"

MARKET REACTION

The bank's shares dropped by 7–8% after the resignations became public, settling around ₹192–₹194, as investor concerns over governance spooked the market.

TRIGGERING GOVERNANCE ISSUES

This as a serious governance lapse: the statutory auditors’ report—made public—accused  MD and ED of defying the board’s authority, which raises red flags about discipline and internal checks.

This underscores the importance of strict adherence to board oversight and internal controls.

 

R V SECKAR FCS,LLB 79047 19295