RBI appoints director on board of Dhanlaxmi Bank

In a regulatory filing, Dhanlaxmi Bank said the banking sector regulator through a letter dated September 28, 2020, has appointed D K Kashyap, General Manager, Reserve Bank of India, Bengaluru Regional Office as Additional Director on the board of the bank. The appointment is for a period of two years with effect from September 28, 2020, to September 27, 2022, or till further orders, whichever is earlier, it said. 

The RBI usually does not appoint its nominee on the boards of private banks unless there are exceptional circumstances to avoid any conflict of interest. Kerala-based Dhanlaxmi Bank was put under the Prompt Corrective Action (PCA) Framework by the RBI in November 2015 due to deteriorating financial health and only last year it came out of these restrictions. Since then it has posted profit.

Bank unions AIBOC and AIBEA have flagged concerns over few developments at Dhanlaxmi Bank and sought immediate corrective measures by the RBI. In a letter written to RBI Governor Shaktikanta Das, All India Bank Officers' Confederation (AIBOC) requested the central bank to take appropriate steps in this regard, so that this 92-years-old institution is allowed to grow in its own space catering to its own niche segments.

In a separate letter, All India Bank Employees' Association (AIBEA) had urged the RBI governor to intervene into the affairs of Dhanlaxmi Bank which it alleged is heading into wrong direction. Another private lender Lakshmi Vilas Bank (LVB), which was put under the PCA framework in September 2019, has also come under the RBI's watch. 

The RBI on Sunday approved appointment of a three-member Committee of Directors (CoD) to run the daily affairs of Lakshmi Vilas Bank after bank shareholders ousted seven directors of the debt-ridden lender. This CoD will exercise the discretionary powers of MD & CEO in the ad-interim.