The board of Thrissur-based Dhanlaxmi Bank Ltd may be striding toward a concession with its large shareholders once it finalises whether to enlist two shareholders directors on the board. These shareholders, illustrating a 13.67% stake, have selected B. Ravindran Pillai, a West Asia-based billionaire and head of RP Group who occupies a 9.99% stake in the bank, and K.N. Madhusoodan, who seizes 1% or 2.5 million shares, to be their representatives on the private sector lender’s board, according to two officials’ conscious of the matter.
The previous year, the board had agreed not to endorse the nomination of five shareholder-directors, including Pillai, on the board. This provoked a few former directors, comprising Madhusoodan approach Kerala High Court to pursue advice from the bank to position their candidature before the annual general meeting (AGM) for a vote.
After various hearings, the high court on 9 March announced the shareholders’ petition was maintainable and ceased the bank from executing additional AGMs appointing directors until the issue was settled. Pillai, the majority stakeholder in Dhanlaxmi Bank, was on the board until May 2020 and had to depart after turning 70. Nonetheless, on 26 April 2021, the Reserve Bank of India (RBI) boosted the age limit for non-executive directors, encompassing the chairperson, to 75.
With the board near to achieving an agreement on inducting shareholder directors, the lawsuit will likely be resigned from the court and the bank will be able to go ahead and put forward funds through a rights issue.
Presently the board has solely five directors comprising Shivan and two RBI nominees. The others are C.K. Gopinathan, a prominent investor with a 10% stake, and an independent director, G. Rajagopalan Nair.
In the past, numerous directors on the board have withdrawn before their terms were discontinued. In December last year, G. Subramonia Iyer retired as chairman and independent director referring to personal justifications. In May this year, Suseela Menon withdrew as an independent director illustrating personal reasons. The bank’s former CEO Sunil Gurbaxani was overthrown in a shareholder battle following which J.K. Shivan, who once worked at State Bank of India, was assigned as MD and CEO in January 2021.
In April, 11 minority shareholders holding 13.67% called for an extraordinary general meeting, announcing the bank was going through a financial hardship and that the cost-to-income ratio had declined to an alarming level. The bank is taking off to begin new branches and apprentice new personnel though the CAR of the bank has been adversely commented on by the RBI,” said the EGM heed. Dhanlaxmi Bank recorded a four-fold leap in net profit at ₹23.42 crore in the quarter ceased March 2022 as well as decent interest income.
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