Karnataka Bank CEO Sarma, Executive Director Sekhar Rao Resign; Raghavendra Srinivas Bhat Appointed COO

Karnataka Bank said in an exchange filing that it has accepted the resignation of Chief Executive Officer and Managing Director Srikrishnan Sarma and Executive Director Sekhar Rao on Sunday. Sarma's resignation will be effective from July 15, 2025, while Rao's resignation will be effective from July 31, 2025.

"Sarma has cited personal reasons, including his decision to relocate back to Mumbai, for his resignation. While, Rao has resigned citing inability to relocate to Mangaluru and other personal reasons," it added.

The exit follows an alleged dispute with the bank’s board on certain expenditures by the bank which were made without appropriate approvals in May.

The bank further has appointed Raghavendra Srinivas Bhat as Chief Operating Officer effective July 2. Meanwhile, the bank has formed a search committee to identify suitable candidates for the position of a new Managing Director & CEO as well as a new Executive Director.

"The bank has appointed an experienced senior banker as the Chief Operating Officer who will assume charge on July 02, 2025. Additionally, substitute arrangements are also being made subject to the regulator’s approval," according to official release.

During the fourth quarter results, the lender's auditor, Ravi Ranjan & Co., had flagged that the expenditure included Rs 1.16 crore incurred for engaging consultants. There was capital expenditure of Rs 37 lakh incurred beyond delegated powers of the whole time directors and not ratified by the board, the auditor had said.

Sarma was questioned regarding the expenditures by the board. At the time, he said the amounts were insignificant.

On the notes to accounts contained in the audited financial statements for the FY25 leading to emphasis of matter in the auditor’s report, the bank states that it has been discussed and amicably resolved.

"The bank continues to take necessary steps to ensure operational stability and assures various stakeholders that it is well capitalised and continues to be sound as hitherto. The transformational journey embarked upon by the bank will continue unhindered," it added.