Kerala-based Dhanlaxmi Bank on Sunday announced that Sridhar Kalyanasundaram, an independent director of the private sector bank has resigned from the board, with effect from 16th September, 2023. “It is hereby informed that Sridhar Kalyanasundaram Independent Director of the Bank, has resigned from the Board of Directors of the Bank w.e.f 16th September, 2023 (i.e, the date of receipt of letter of resignation by the Bank),” the Bank said in a regulatory filing.
In his resignation letter to the Board of directors, Sridhar Kalyanasundaram disclosed multiple issues and instances that were the ‘drivers of his decision to quit’, These included lack of support from the board, issues related to a rights issue plan, capital enhancement plan, conduct of the bank’s board, probity and lack of consensus on the various ‘whistle-blower’ issues raised to the Directors and unethical conduct of bank’s business, unilateral arrogation of powers by the board despite legal advice, among others. “The specific instances in the following paragraphs are probably the drivers of my decision to quit rather than fight a lone battle where the other members of the board are either incapable of comprehending the impact of the issues or are deliberately siding with the MD & CEO, for reasons known only to them,” he said. He also raised the issue of alleged ‘lack of in depth banking knowledge’ in other members.
“There are many instances where despite the value of the inputs given, my inputs have been deliberately negated/ avoided/ overruled by the other members of the Board, just to support the belligerent attitude of the MD & CEO – who is on public record (in the vernacular press) that he cares little for shareholders and the directors. I am not the only or even the first director to face his wrath for not towing his line, as many had left rendering this Board legally inconsistent with required composition,” he said in the letter.
Dhanlaxmi Bank has 10 board members including two additional directors appointed by the Reserve Bank of India.
Talking about the issues, he said that one of the major issues include ‘81 queries’ regarding the bank’s rights issue on the issue agreement proposed with the issue manager, which he said, is still unresolved. “It is even today unresolved, despite various legal inputs from different quarters, and ‘compromise meetings’ held by the Chairman of the EIC in the months of June/July,” he said.
He further added that his advice regarding capital enhancement at the bank was also deliberately stifled by other members of the board. “I had always been advising my colleagues on the Board, and the executive of the Bank, that the proposed Rights Issue based infusion of Rs 130 crores is not sufficient if the Bank was to remain competitive and relevant,” he mentioned in the letter, which he added, was denied.
The next issue he raised was the irregularities in the manner that the MD and the company secretary were conducting the Board and Committee Meetings deciding on the agenda and the frequency of the same, at both the meetings of the Independent Directors.
Sridhar Kalyanasundaram further stated, “This Board has been in receipt of numerous complaints of both the anonymous and the signed varieties but has been singularly focused on dismissing all of them as “the habit in this Bank over time”.”
He also talked about the unethical conduct of the Bank’s businesses. “The classic case in reference is to the recent OTS of the Jalan Hotels of Kolkata, where the OTS was used to release a guarantor – even after the original debtor had been cleared by the consortium of banks and lenders – and where your Bank held a Registered Charge against the property given as guarantee to the original debtor,” he said.
“Despite my advising the Board of the hugely discounted offer (Rs 5.25Crs against a reported market value of Rs 35CRs), I was voted out 6 to 1, and surprisingly even one of the additional directors appointed by the regulators supported the proposal brought to the Board,” he added.
Sridhar Kalyanasundaram was appointed to the Board of Directors as an Independent Director on the 5th December 2022, and was confirmed of the same by the shareholders at the 95th AGM of the Bank.