Shares of IndusInd Bank plummeted nearly 7.50 per cent after the RBI approved the re-appointment of CEO Sumant Kathpalia for a shorter term.
Last Friday, the private sector lender had announced the banking regulator had approved the re-appointment of Kathpalia as its managing director and CEO for two years from March 24. This is lower than the expectation that he would be re-appointed for a period of three years.
In September last year, the board of IndusInd Bank had approved the re-appointment of Kathpalia as managing director and chief executive officer for three years with effect from March 24, 2023.
Kathpalia, who was appointed as MD and CEO of IndusInd Bank in March 2020, has played a key role in turning around the lender.
Investor disappointment over the development led to shares of IndusInd ending at Rs 1,060 on the BSE on Monday, a fall of 7.46 per cent, or Rs85.50, over the previous close. During intra-day trades, the share fell to a low of Rs 1,055.95— a drop of 7.81 per cent.
JP Morgan downgraded the stock to neutral from overweight and cut the target price to Rs 1,060 per share saying that in the current environment of tightening liquidity, the reappointment for only two years could put the bank at a disadvantage.