Karnataka Bank shares in focus: Lender says financial position remains robust; it has capital adequacy ratio of 19.85%

"Karnataka Bank would like to reassure all its valued customers and stakeholders that the safety and security of depositors' money has always been, and will continue to be, our utmost priority," the lender said in its press release.

Shares of the private sector bank ended 5.66% lower on Monday after the resignation of top officials – the CEO and executive director.

Karnataka Bank, in its press release, said that the lender's board has accepted the resignation of the Managing Director & CEO, Srikrishnan Hari Hara Sarma, on June 29. The resignation will be effective from July 15, 2025. Sarma has cited personal reasons, including his decision to relocate back to Mumbai, for his resignation.

The Bank’s Executive Director, Sekhar Rao, has also submitted his resignation, citing inability to relocate to Mangaluru and other personal reasons. The resignation has been accepted by the Board and will be effective from July 31, 2025, the press release added.

Karnataka Bank condemns "malicious rumours"

In its clarification, the bank said it strongly disapproves of and condemns the malicious and baseless rumours recently circulated by a media outlet. These statements are clearly aimed at sensationalising the issue and misleading the public, with motives that appear to be highly questionable.

It is important to highlight that Karnataka Bank is well-capitalised, with a capital adequacy ratio (CAR) of over 19.85%, which reflects the soundness of the bank's financial position and robust risk management practices.

The capital adequacy ratio (CAR) is a metric to assess a bank's financial position. It set standards for banks by looking at a bank’s ability to pay liabilities and respond to credit risks and operational risks. A bank that has a good CAR has enough capital to absorb potential losses.

"The bank's fundamentals remain strong, and our commitment to transparency, customer service, and ethical governance remains unwavering. We have initiated appropriate legal proceedings against the media outlet in question for spreading false, misleading, and defamatory content without verifying facts with the bank," the lender said in its press release on June 30.

Earlier, news reports said that Karnataka Bank’s chief executive officer Srikrishnan Hari Hara Sarma stepped down from his position due to the differences between Sarma, Rao, and the bank’s board. The differences were due to a certain expenditure incurred by the lender, which is said to have resulted in the chief executive wanting to step down from his position, the reports added.