RBI's role in Dhanlaxmi Bank Board should be reviewed: AIBEA

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SME Times News Bureau | 27 Sep, 2020
The role of Reserve Bank of India (RBI) in the Board of Directors of Dhanlaxmi Bank (originally Dhanalakshmi Bank) should be reviewed, said a top official of the largest union in the banking sector.

Stating that the small private sector bank Dhanlaxmi Bank which had turned around is back to old ways C.H. Venkatachalam, General Secretary, All India Bank Employees' Association (AIBEA) said: "We strongly believe that RBI's role in the Board of Directors of the Bank should be reviewed as otherwise RBI would become answerable if things go bad."

In a letter to Shaktikanta Das, Governor, RBI on Saturday Venkatachalam said: "If Reserve Bank of India does not effectively intervene in the affairs of this Bank now, once again the Bank will run into problems. Slowly, the people and the customers of the Bank have regained their confidence about the Bank and any reversal of the same would be suicidal for the Bank."

"We strongly believe that RBI's role in the Board of Directors of the Bank should be reviewed as otherwise RBI would become answerable if things go bad," Venkatachalam said and sought Das' personal and urgent intervention.

Venkatachalam said the 93-year old small sized Kerala based Dhanlaxmi Bank around 2008-2012 was making losses.

The bank made a loss of over Rs 850 crore during that period as the top management brought it to serious problems and in the name of modernising it, Venkatachalam recalled.

"With the intervention of RBI, change in top management, and strengthening its capital base, etc. and inducting some reputed people on the Board of Directors of the Bank, the Bank has been making a turnaround and now the Bank has come into profit," the letter notes.

Venkatachalam said for the past two years, Dhanlaxmi Bank is making profits with the profit for last fiscal being Rs 65 crore-the highest since the bank's inception.

"In the beginning of this year, the top management has changed and in the recent months we are concerned to observe that perhaps the Bank once again is heading in the wrong direction," Venkatachalam said.

Earlier the bank closed down many of its branches in north Indian States owing to inadequate controls which landed the bank into problems.

"But we learn that attempts are again being made to open more Branches in northern States while the Bank has inadequate infrastructure to manage the business in those areas," Venkatachalam sounded the warning bugle.

Expressing concern at the plans to appoint a large number of sales executives and senior executives on contractual and cost to company basis at much higher remuneration Venkatachalam said the move would land the bank in a catastrophe as the already the cost to income ratio is high.