Dhanlaxmi Bank shares in focus as independent director resigns citing multiple issues

Shares of Dhanlaxmi Bank will be in focus on Monday after independent director Sridhar Kalyanasundaram, citing concerns related to unethical conduct of the bank's businesses and factionaism on the board, among others. In his resignation, Kalyanasundaram said there were many instances where despite the value of the inputs given, his inputs were deliberately negated or overruled by the other members of the bank board, just to "support the belligerent attitude of the MD & CEO - who is on public record (in the vernacular press) said 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," Kalyanasundaram said.

The private lender informed stock exchanges about Kalyanasundaram's resignation on Sunday. Dhanlaxmi Bank share had hit 20 per cent upper circuit limit at Rs 29.25 on Friday. Kalyanasundaram noted that the bank 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."

"In fact the CVO appointment itself proved a challenge and had to be completed only recently and that too due to pressure from the Regulators and not as a function of the Board Oversight itself. Some of such complaints have included even issues like "material suppression of facts by some board members" themselves (including references to items like not declaring an Income Tax Raid in his Fit and Proper Statement by a particular Board Member) The collective responsibility of the Board in its failure to rectify such cannot be wished away and I personally do not want to be a part of a group that practices a belief that you can wish such behavior away," Kalyanasundaram said.

On unethical conduct of the bank's businesses, Kalyanasundaram said: "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. Despite my advising the Board of the hugely discounted offer (Rs 5.25 crore against a reported market value of Rs 35 crore), 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."

Kalyanasundaram was appointed by the board of directors as an independent director on the December 5, 2022. His appointment was confirmed at the 95th AGM of the bank held on the December, 30, 2022.

"I had advised 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. It was brushed away as 'not a serious issue'. This attitude of the some of the Independent Directors led to the management deliberately avoiding holding of some of the Committee Meetings despite the Board having approved the recommendation to hold the Risk Management Committee meetings at a monthly interval - alternating between Risks Review and Policy Review on alternate months," Kalyanasundaram said.

Kalyanasundaram said the MD is on record dismissed the same as 'only perception of risks by some senior executives' at the RMCB that was belatedly held in June, after a gap of 4 months, despite regulatory guidelines of a quarterly frequency, at least," he said.

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