Dhanlaxmi Bank shareholders question rights issue plan

“The registered speaker shareholders raised queries relating to the bank on various topics including strategies considered by the bank for the bank’s growth as well as maximizing shareholder value, proposed rights issue…,” the bank said in an exchange filing.

dhanlaxmi bank
On March 17, the bank had approved a rights issue of up to Rs 130 crore.

The shareholders of controversy-ridden Dhanlaxmi Bank on Sunday raised queries on the lender’s plan to raise Rs 130 crore via a rights issue in its extraordinary general meeting (EGM). Questions were also asked about the management’s strategy to boost growth of the Kerala-based bank.

“The registered speaker shareholders raised queries relating to the bank on various topics including strategies considered by the bank for the bank’s growth as well as maximizing shareholder value, proposed rights issue…,” the bank said in an exchange filing.

On March 17, the bank had approved a rights issue of up to Rs 130 crore. Following that, the bank announced an expansion plan which included opening of an administrative office and 20 new branches in southern India.

A clutch of minority shareholders in April called for an EGM shortly after the bank announced the fund raising and the expansion plan, alleging inordinate expenditure by the bank’s management. B Ravindran Pillai and B Goindan, along with nine other shareholders had called for the EGM. 

These shareholders together hold more than 10% stake in the bank. As per the norms, shareholders having 10% stake in a company can call for an EGM. A total of  46 Shareholders were present in the EGM.

Earlier, the shareholders had also raised a red flag on the bank’s rising cost-to-income ratio and also said that the lender needs to place controls over expenditure especially in light of the deteriorating capital adequacy ratio, which is adversely commented upon by the Reserve Bank of India.

The cost-to-income ratio of the bank declined consistently in FY22 from 85.04% in Q1FY22 to 74.73% in Q4FY22. Similarly, capital requirement adequacy ratio (CRAR) declined from 14.57% in Q1FY22 to 12.98% in Q4 FY22.

Independent director G Rajagopalan Nair, MD & CEO J K Shivan and director C K Gopinathan along with other executives attended the EGM. Other than these three board members, the bank has only two RBI-appointed board members, Jayakumar Yarasi and D K Kashyap. Yarasi was appointed as additional director in place of G Jagan Mohan. The term of his appointment is from May 2022 till May 2024.

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