It was also decided to re-elect two outgoing members to the countrys premier private sector banks board subject to the approval of shareholders. Contrary to earlier reports, the director board decided to go ahead with the annual general body meeting (AGM) of its shareholders on September 9.

Bank chairman K Nandan said the board of directors on Tuesday decided to seek the shareholders approval at the AGM to be held on September 9 for re-electing two outgoing directors, K T Chandy and M S Parthasarathy, and the appointment of two new directors V Khalid, former justice of the Supreme Court, and U Mahesh Rao, former managing director of the General Insurance Corporation ofIndia. "With such re-election and appointment, the board will have the full strength of nine members, besides the Reserve Bank nominee", Nandan said.

Bank sources also clarified that the appointment of Khalid and Mahesh Rao into the eighth and ninth posts on the board was based on their ‘eminence and professional competence. They also denied reports that Mahesh Rao was appointed at the behest of ICICI, the single largest shareholder in the bank. ICICI is the single largest shareholder in the countrys number one private sector bank with over 21 per cent stake.

A section of the media had earlier reported that ICICI was arm twisting the Federal Bank management to appoint an additional nominee on the banks director board. Following this, a section of the directors came out in the open against the ICICI demand leading to speculations about a showdown between the two sections of board members at Tuesdays board meeting.

However, contrary to rumours, the meeting went off smoothly and the members were unanimousin their decision to appoint Khalid and Rao, sources said.