Dhanlaxmi Bank independent director resigns citing differences from other board members

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KOLKATA: An independent director of private sector Dhanlaxmi Bank has resigned from the bank’s board citing factionaism on the board as well as unethical conduct of the bank’s businesses which includes misusing the one-time settlement mechanism for bad loan resolution.

The director, Sridhar Kalyanasundaram, who was appointed to the board in December last year, wrote a tell-all resignation letter to the board detailing his differences regarding rights issue of shares, complained of lack of support from other board members and raised concerns over their ‘lack of in depth banking knowledge’.

He has also pointed fingers at Reserve Bank of Indias’ nominee director for overlooking the alleged bad loan settlement irregularities.

“I was having little or no support from the other members of the board on the
various issues affecting the bank – mainly due to lack of depth of knowledge in banking and also due to the factionalism in the board,” he wrote.

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His resignation was accepted with effect from September 16, that’s the date of his letter, in which he also criticised the managing director of the bank Shivan JK for ignoring shareholders’ concerns.

“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,” he wrote, adding that he was not the first director “to face his wrath for not towing his line.”

He said the rights issue of the bank was held up for over 9 months after it was approved by the board in March last year due to lack of requited composition in the board to transact rights issue.

The bank had received complaints from other ‘whistle-blowers’ earlier too but Kalyanasundaram said that all those had been overlooked by the bank terming those as “the habit in this bank over time”.

The director also alleged that the bank has been using a one-time settlement scheme even without any meaningful impact on the bank’s non-performing assets. The NPA ratio was at 5.2% at the end of June.

It will now be interesting to see how RBI will address the alleged lack of governance at the bank.

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