Bank union approaches RBI on Dhanlaxmi governance issues

DhanLaxmiBank.

MUMBAI: Weeks after shareholders rejected the appointment of Dhanlaxmi Bank chief executive, the Kerala arm of Bank Employees Federation of India (BEFI-K) has written to the Reserve Bank of India (RBI), seeking its intervention into the affairs of the private lender.

The union said had there been a system of conducting exit interviews with the management, RBI could have captured the menace long back, said the letter dated 6 October, a copy of which has been reviewed by Mint.

“K Jayakumar, former chief secretary, Government of Kerala, one of the directors had clearly indicated the undue interference of the then chief general manager (CGM), P Manikandan, in his resignation letter,” the union said.

Jayakumar had resigned from his role in 2016.

A person aware of the development had earlier told Mint that votes against the CEO are likely a result of the friction with shareholders and within the management on issues, including the recent intervention of the central bank, which reportedly led to the termination of Manikandan.

That apart, ousted chief executive Sunil Gurbaxani had told Mint on 1 October that he had informed the RBI about some “unacceptable” events in the bank over the past six months and believes he paid the price of being upright and honest. Gurbaxani had also said he was warned much before Wednesday’s annual general meeting (AGM) by some directors that he could be ousted, which meant that the move did not come as a complete surprise.

“Those who have dissented were shown the door unceremoniously. Hence, we would urge the regulator to institute a detailed enquiry on the misdeeds of the ousted CGM during the last 10-year period, which will certainly unearth the root causes for the pathetic state of affairs of Dhanlaxmi Bank,” said the BEFI-K letter.

The union also requested the central bank to appoint an interim managing director with adequate qualifications and efficiency. It alleged that the board of the bank, which is fully packed with the ‘yes men’ of former CGM, has to be dealt with appropriately by RBI.

Dhanlaxmi Bank said on 1 October that RBI has approved a plan for an interim arrangement through a committee of directors to exercise the powers of managing director till a replacement is found. The committee of directors will be constituted with G. Subramonia Iyer as chairman and G. Rajagopalan Nair and P.K Vijayakumar as members. However, RBI has informed the bank that this arrangement will not continue beyond four months.

The private sector lender has seen a spate of exits recently. Sanjeev Krishnan, part-time chairman and independent director resigned in June, with eight months of his term still remaining. The bank had said Krishnan resigned citing personal reasons. He was appointed on the board of the bank in February 2018. Krishnan had told Mint that RBI had appointed him to effect a turnaround in the bank and he has now resigned after the bank made profit of ?65.78 crore in FY20. Other directors like K.N Murali and G Venkatanarayanan resigned from the board in June as well.

On 28 September, RBI appointed D. K. Kashyap, a general manager in the central bank’s Bengaluru office, as additional director on the board of the bank for a period of two years.

The bank posted a net profit of ?6.09 crore in the June quarter of FY21, down from ?19.84 crore in the same period last year. Its gross bad loan ratio stood at 6.89%, while net non-performing asset (NPA) ratio was at 2.18% as on 30 June. The bank’s capital adequacy ratio was also above the regulatory requirement, at 13.94%.

News Source:- livemint

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