Karnataka Bank CEO Srikrishnan Sarma Resigns

A formal disclosure on Sarma’s exit will follow post board approvals. (Photo source: Company website)

Karnataka Bank Chief Executive Officer and Managing Director Srikrishnan Sarma has resigned, according to people in the know.

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.

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.

Concerns were raised regarding the process under which the expenditures were made. In response, Sarma had said there had been ambiguity regarding the policy involved, which had been corrected.

P Pradeep Kumar, non-executive chairman at Karnataka Bank declined to comment on the report.

A message and call to Sarma remained unanswered on Saturday.

A formal disclosure on Sarma's exit will follow post board approvals.

In April, Karnataka Bank had appointed an external agency to conduct a forensic review of its suspicious global UPI transactions.

This move was based on direction by the bank's board and the Reserve Bank of India.

The appointment concerned certain deficiencies in the reconciliation process, related to suspicious global UPI transactions reported on Feb. 17, according to an exchange filing.

Pipara & Co., a chartered accountant firm in Ahmedabad, was the external agency appointed as forensic auditors to review and report on the matter.

On Feb. 17, the bank had informed exchanges that it had reversed suspicious cross border UPI transactions worth Rs 18.87 crore to its customers.

Reversal was done as these transactions could not be processed, as it was reflected during the reconciliation exercise with National Payments Corporation of India, undertaken by the bank.