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Employees’ Union AIBEA seeks RBI’s ‘urgent intervention’ in Dhanlaxmi Bank

AIBEA General Secretary CH Venkatachalam raised concerns with regards to changes in the top management at the start of 2020 and in recent months

September 27, 2020 / 03:44 PM IST
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The All India Bank Employees Association (AIBEA) has sought Reserve Bank of India's (RBI) 'urgent intervention' into the affairs of Thrissur-based private lender Dhanlaxmi Bank “before it runs into problems.”

AIBEA General Secretary CH Venkatachalam, in a letter to RBI, alleged that top management had "brought serious problems and created a virtual mess in the name of modernising" the bank, Business Standard reported.

In the letter, Venkatachalam said the 93-year-old institution had faced performance-based losses of over Rs 850 crore between 2008 and 2012, but made strides after RBI intervention mandated a change in the top management and strengthening of its capital base. It recorded its highest ever profit of Rs 65 crore in FY20.

He raised concerns with regards to changes in the top management at the start of 2020 and in recent months, alleging: “The bank is again heading in the wrong direction. Instead of consolidating gains and strengthening the bank, we observe that efforts are on to change the business profile, which are bound to land the bank into difficulties.”

The letter points out that 'a lot' of branches were opened in north India, but soon closed many after problems arose due to “inadequate control and supervision.”


“....but we learn that attempts are again being made to open more branches in the northern states, while the bank has inadequate infrastructure to manage business in those areas. Similarly, the cost to income ratio in this bank is already high, and it goes without saying that there is imperative need and necessity to improve the ratio substantially. We are sure that the RBI would also be of the same view in this regard,” he said.

Venkatachalam also expressed concern on contractual appointments of a large number of sales and senior executives on a cost to company basis at a much higher remuneration. He said the bank cannot bear and afford the financial burden at this juncture and will land in a catastrophe.

“If the RBI does not effectively intervene in the affairs of Dhanlaxmi Bank now, it will once again run into problems. People have slowly regained their confidence in the bank, and any reversal of the same would be suicidal for the financial institution,” he noted, requesting “urgent intervention.”
Moneycontrol News
first published: Sep 27, 2020 03:44 pm
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