IDBI Bank share price cracks 6% on CEO's appointment as RBI Deputy Governor

Shares of IDBI Bank cracked over 6 per cent on Monday after the government named IDBI Bank’s CEO Mahesh Kumar Jain as RBI deputy governor for three years. Reacting negatively to the news, the stock of IDBI Bank tanked as much as 6.4 per cent to Rs 59.80 on the BSE. 

The stock settled at Rs 61.10, down 4.38 per cent. Till last Friday, the stock had risen 6.4 per cent this year.

"Jain was working in Indian Bank where there was a turnaround back in 2015 because of his strategies such as the sale of non-core assets and reduction of high corporate debt. Then he was transferred to IDBI Bank for its turnaround," said Yuvraj Choudhary, an analyst at Anand Rathi Securities to Reuters. 

Jain's exit is negative for stock, Choudhary added. 

Jain's appointment was made by the Financial Sector Regulatory Appointment Search Committee, which includes the Reserve Bank of India (RBI) Governor, the Financial Services Secretary, besides other independent members.

The post of one of the Deputy Governors at the Central bank fell vacant after the retirement of S S Mundra on July 31, 2017.

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Jain has been at his current post at state-run IDBI Bank since April 2017 and has previously served as the Chief Executive of Indian Bank. A career banker, he has also been a member of the Indian Banks` Association Committee on risk management.

The government had advertised for the post of RBI Deputy Governor in January this year and as many as 40 applications had been received in response, according to sources.