Dhanlaxmi Bank CEO case to test primacy of RBI over banks' shareholders

The removal of Sunil Gurbaxani from the corner room at Dhanlaxmi Bank in a shareholder coup has led the private banking system into uncharted waters. Should the Reserve Bank of India (RBI) go along with what a bank’s shareholders deem fit by exercising their rightunder the Companies Act? Or should it reinstate a helmsman (in the immediate instance Gurbuxani) to underscore its powers, and the primacy of the Banking Regulation Act (BR Act: 1949), if it were to feel otherwise? The BR Act vests the banking regulator with the powers to appoint “the chairman of the Board of Directo.....

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