Mumbai:  Shareholders of IndusInd Bank have rejected a key proposal by the bank's promoters, IndusInd International Holdings Ltd. (IIHL), to appoint two nominee directors to the board during the bank’s Annual General Meeting held on August 29. The resolution was defeated as 54% of the votes cast were against it, reflecting shareholder concerns over increased promoter influence in the bank’s governance.

The proposal sought to amend the bank’s Articles of Association to align the definition of "promoters" with Reserve Bank of India (RBI) guidelines and allow limited nomination rights for promoters, with a cap on non-independent directors. Despite prior approvals from the RBI and the bank’s board, the resolution faced opposition from proxy advisory firms, which analysts say likely influenced the voting outcome.

While the nominee director proposal was rejected, shareholders approved other key resolutions, including the appointment of Rajiv Anand as Managing Director and CEO. Anand’s leadership is expected to guide the bank through ongoing recovery efforts following financial setbacks from past fraud incidents.

IIHL expressed disappointment over the AGM outcome, noting that the proposal fully complied with legal and regulatory requirements. The promoter company indicated its willingness to engage with shareholders and address concerns in line with RBI guidelines.

Over the years, IIHL has reduced its stake in IndusInd Bank from over 90% in 1994 to around 15% today. The company has requested RBI approval to increase its stake to 26% following recommendations from the RBI’s Internal Working Group. The regulator’s decision on this request is still pending.

This development highlights the critical role of shareholder engagement in shaping governance decisions and the future direction of financial institutions like IndusInd Bank.