The Board of Administrators of 100-year previous Karnataka Financial institution on Sunday accepted the resignation of the financial institution’s Managing Director and CEO Srikrishnan Hari Hara Sarma and Govt Director Sekhar Rao amid pink flags raised by the auditors about sure spending.
Sarma has cited private causes, together with his choice to relocate again to Mumbai, for his resignation. His resignation can be efficient from July 15. Rao submitted his resignation citing incapability to relocate to Mangaluru and different private causes. His resignation can be efficient from July 31.
Whereas the Mangaluru-based financial institution, with 957 branches, has no particular promoter, the complete stake is held by public, NBFCs, FPIs and mutual funds. As of the quarter ended March 31, 2025, Karnataka Financial institution reported whole deposits of Rs 1.04 lakh crore.
The financial institution’s shares fell by 5.51 per cent to Rs 196.25 on the BSE on Monday morning session.
Crimson flags
The resignations of Karnataka Financial institution’s MD and ED got here roughly six weeks after the financial institution’s auditors raised considerations over sure expenditures made by the 2 executives. These bills, which exceeded their delegated authority and weren’t authorized by the board, included Rs 1.53 crore in spending deemed recoverable from the involved administrators—comprising Rs 1.16 crore on consultants and Rs 37 lakh on income and capital objects.
Whereas the official motive cited for his or her exit was private, together with relocation-related components, the timing suggests deeper points, stated an analyst, including that the auditor’s findings pointed to governance lapses and inner friction, prompting uncertainty amongst buyers and triggering a broader management shake-up on the financial institution.
On the Notes to Accounts contained within the audited Monetary Statements for the FY25 resulting in emphasis of matter within the Auditor’s Report, the financial institution said that “it has been mentioned and amicably resolved”.
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Financial institution trying to find new MD, ED
The financial institution has shaped a search committee to establish appropriate candidates for the place of a brand new Managing Director & CEO in addition to a brand new Govt Director. “The financial institution has appointed an skilled senior banker because the Chief Working Officer (COO) who will assume cost on July 02, 2025. Moreover, substitute preparations are additionally being made topic to the regulator’s approval,” the financial institution stated in an trade submitting.
“The financial institution continues to take crucial steps to make sure operational stability and assures varied stakeholders that it’s effectively capitalised and continues to be sound as hitherto. The transformational journey embarked upon by the financial institution will proceed unhindered,” the submitting stated.
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