Dhanlaxmi Bank likely to propose new candidate as part-time chairman soon

Dhanlaxmi Bank

Kerala-based Dhanlaxmi Bank is likely to propose a fresh candidate as part-time chairman in the next few weeks after the Reserve Bank of India (RBI) rejected the lender's earlier suggestion to appoint G Rajagopalan Nair, according to a person familiar with the development.

“The bank has assured the regulator that it will send the new recommendation soon, probably as early as in the next few weeks,” said the person, who didn’t want to be named. The assurance was given after the RBI enquired about the status of the process to select a new part-time chairman, the person added.

The Kerala-based bank doesn’t have a chairman since the resignation of G Subramonia Iyer in December 2021. Iyer had resigned citing certain urgent and emergent domestic and personal reasons. He was appointed as part-time chairman in February 2021. His predecessor Sajeev Krishnan, too, had resigned in June 2020, citing personal reasons.

That apart, there have been several senior-level exits from the Dhanlaxmi Bank’s board over the last few years.

The Bank now has 10 members on the board, including Managing Director and CEO Shivan JK and RBI-appointed Additional Directors DK Kashyap and Jayakumar Yarasi. Other directors include G Rajagopalan Nair, CK Gopinathan, KN Madhusoodanan, Sreesankar Radhakrishnan, Nirmala Padmanabhan, Sridhar Kalyanasundaram and Vardhini Kalyanaraman.

An email sent to Dhanlaxmi Bank seeking a comment remained unanswered till the time of filing this copy.

On May 23, Moneycontrol had reported that the RBI had said no to a proposal by the bank to appoint G Rajagopalan Nair as its part-time chairman. The bank’s nomination and remuneration committee (NRC) and the board had in February cleared Nair’s name for the post. The proposal was subsequently sent to the banking regulator for clearance.

Rights issue on track

The bank has assured the regulator that it will speed up the rights issue plan without delay. “The process for the rights issue is on track. It should take around 45 days for the process to get completed,” said the person quoted above.

In March 2022, the Board of Dhanlaxmi Bank had approved the rights issue of equity shares worth up to Rs 130 crore, aimed at augmenting its paid-up capital. But the plan got delayed for various reasons including the approvals from Board members.

While there have been exits at the top, Dhanlaxmi Bank has seen an improvement in its financial situation ever since the bank came out of the RBI’s Prompt Corrective Action (PCA) framework in February 2019. The bank's bad loan levels and capital ratios have improved above the regulatory minimum.

On May 22, Dhanlaxmi Bank reported a jump in net profit at Rs 38.2 crore for the fourth quarter ended March 31, 2023, as against Rs 23 crore a year ago. The gross non-performing assets (GNPAs) stood at 5.19 percent in the March quarter against 5.83 percent in the December quarter. Net NPAs came at an all-time low of 1.16 percent as against 1.82 percent on-quarter, the Thrissur-based bank said in a regulatory filing.

In absolute terms, GNPAs stood at Rs 511.14 crore as against Rs 539.11 crore on-quarter, whereas net NPAs fell to Rs 109.20 crore as against Rs 161.08 crore on-quarter. The bank has a provision coverage ratio of 90.61 percent and a capital adequacy ratio of 12.32 percent.

Net interest income (NII), which is the difference between the interest income a bank earns from its lending activities and the interest it pays to depositors, climbed 19.5 percent to Rs 115.2 crore from 96.4 percent last fiscal.