UTI Bank to seek shareholders approval to reappoint Nayak as chairman

Mumbai: UTI Bank will seek approval of its shareholders for appointing P J Nayak, the incumbent chairman and managing director, as its executive chairman for a two-year period beginning August 1, 2007.

This is despite the fact that the RBI wants UTI Bank to split the post of the chairman and managing director into two posts of a non-executive chairman and a wholetime director as managing director.

However, the RBI may find it difficult to stop the appointment of Nayak as executive chairman since corporate governance norms do not say the chairman cannot be a whole time director.

The RBI had earlier rejected the bank''s proposal to give Nayak a two-year extension as the chairman and managing director.

UTI Bank now seems to have no choice but to ask Nayak to continue as the bank''s problems would increase by the absence of a second rung of top managers who could immediately succeed him.

The Reserve Bank had earlier rejected the bank board''s decision to give Nayak an extension whose term ends on July 31. It had asked the bank to split the post of chairman and managing director in keeping with the Ganguly committee report on corporate governance.

Following which the bank board decided to appoint Nayak as the whole time chairman. According to the Banking Regulation Act 10(B), a bank chairman can either be wholetime or part time.