Karnataka Bank Share Price: Private Lender's Stock Crashes Over 5% After Top Brass Resigns — What’s Behind Crisis?

Karnataka Bank Share Price: Shares of Karnataka Bank Ltd fell sharply on Monday, dropping 5.46% to Rs 196.35, after the sudden resignations of the bank’s top leadership sparked concerns among investors.

The bank announced that its Managing Director and CEO, Srikrishnan Hari Hara Sarma, has resigned, citing personal reasons and his plan to relocate back to Mumbai. His resignation will be effective from July 15, 2025.

Alongside him, the Executive Director, Sekhar Rao, has also stepped down, saying he was unable to relocate to Mangaluru and had other personal reasons. Rao’s resignation will take effect from July 31, 2025.

The back-to-back exits have come as a shock to the market, causing the stock to tumble and raising questions about the bank’s governance and stability. To manage the situation, the Board of Directors has formed a search committee to find new candidates for both the MD & CEO and Executive Director positions.

In the meantime, the bank has appointed an experienced senior banker as Chief Operating Officer, who will take charge on July 2, 2025. Substitute arrangements are also being made with regulatory approval.

Also Read: Who Will Be IndusInd Bank’s Next CEO? Check The 3 Names Sent To RBI

What's Happening In Karnataka Bank?

Adding to investor worries are reports about governance issues within the bank. According to media sources, auditors had flagged about Rs 1.53 crore in expenses that were spent without proper board approval. These unauthorised payments are mainly related to consultancy fees and operational costs.

While the bank said that the matter had been discussed and amicably resolved, it has still created doubts about the effectiveness of internal controls.

In its statement, Karnataka Bank assured stakeholders that it remains well-capitalised and operationally stable. The bank also said its transformational journey will continue without disruption despite the management shake-up.

Karnataka Bank Q4 Results 2025

The private sector lender reported an 8% year-on-year decline in net profit, which stood at Rs 252.4 crore for the fourth quarter ended March 31, 2025, compared to Rs 274.2 crore in the same period last year. For the full financial year FY25, Karnataka Bank posted a net profit of Rs 1,272.37 crore, marking a 2.6% drop from Rs 1,306.28 crore recorded in FY24.

The bank’s net interest income (NII), which is the difference between the interest earned from loans and the interest paid to depositors, also fell by 6.4% to Rs 780.7 crore, down from Rs 834.1 crore in Q4 FY24.