The RBI on Monday said it has imposed a penalty of Rs 27.5 lakh on Dhanlaxmi Bank, Thrissur, for contravention of certain norms related to the ‘Depositor Education and Awareness Fund Scheme’.
The banking regulator also imposed a Rs 20 lakh penalty on the NE & EC Railway Employees’ Multi-State Primary Cooperative Bank, Gorakhpur, for deficiencies in regulatory compliance.
In a statement, the RBI said penalty on Dhanlaxmi Bank has been imposed for contravention of a section of the Banking Regulation Act, 1949 read with a paragraph of The Depositor Education and Awareness Fund Scheme, 2014 (the scheme).
The RBI said the Statutory Inspection for Supervisory Evaluation (ISE) of the bank was conducted with reference to its financial position as on March 31, 2020, and the examination of the Risk Assessment Report and Inspection Report pertaining to the same, revealed, inter-alia, contravention of the provisions of the Act read with the scheme.
A notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for contravention.
“After considering the bank’s reply to the notice and oral submissions made during the personal hearing, RBI came to the conclusion that the charge of contravention of aforesaid provisions of the Act read with the scheme was substantiated and warranted imposition of monetary penalty on the bank,” it said.
In another statement, the RBI said the inspection report of the NE & EC Railway Employees’ Multi-State Primary Co-operative Bank based on its financial position as on March 31, 2019 revealed non-adherence/violation of specific directions issued to it under the Supervisory Action Framework (SAF).
In both cases, the RBI said, the penalty is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the banks with their customers.
The Thrissur-based lender had reported a net profit of Rs 6.09 crore in Q1 of FY21 and Rs 5.28 crore in the preceding quarter.
Dhanlaxmi bank on Wednesday reported a 11.5% year-on-year (y-o-y) increase in its first quarter net profit to Rs 6.79 crore largely due to lower provisions for bad loans.The Thrissur-based lender had reported a net profit of Rs 6.09 crore in Q1 of FY21 and Rs 5.28 crore in the preceding quarter.
Provisions and contingencies have been reduced by almost 94.3 % to Rs 2.1 crore ,as against Rs 37.02 crore provided in the year-ago period. Asset quality has worsened with Gross NPA as a percentage of gross advances was reported at 9.27% for the quarter under review as against 9.23% in the fourth quarter and 6.89% in Q1 of FY21.
Net NPA ratio is reported at 4.58 % compared to 4.76 % reported in the preceding fourth quarter and 2.18 % in the comparable quarter of last fiscal year.
In value terms, gross NPAs increased to Rs 641.53 crore from Rs 464.45 crore in the year-ago period. The total income for Q1 of FY22 is seen lower by 14.2% YoY to Rs 239.02 crore, while the bank’s interest income decreased to Rs 218.10 crore and income from other sources fell to Rs 20.92 crore from Rs 41.97 crore. Provision coverage ratio (including technical write off) as of June 30, 2021, is 75.66 %.
Dhanlaxmi Bank has registered 11.5 per cent increase in its net profit at ₹6.79 crore in Q1 of current fiscal.
The operating profit for the quarter stood at ₹8.89 crore. The total business reached ₹18,575 crore as on June 30 from ₹17,847 crore as on June 30, 2020, registering growth of 4.08 per cent.
A press statement here said that total deposits recorded growth of 4.94 per cent to ₹11,658 crore as on June 30, from ₹11,109 crore. CASA grew by 15.61 per cent to ₹3,859 crore from ₹3,338 crore.
Gross advance improved to ₹6,917 crore from ₹6,738 crore. Retail advance grew by 14 per cent and reached ₹3,560 crore. Gold loans improved by 37 per cent and reached ₹1,822 crore.
CRAR improved to 14.57 per cent as on June 30, against 13.94 per cent as on June 30, 2020.
Return on Assets improved to 0.21 per cent against 0.20 per cent. Return on Equity improved to 3.13 per cent against 2.93 per cent. Book Value of shares as on June 30 was ₹34.42.
The bank will continue the focus on retail advances including gold loans and SME advances, NPA recovery, CASA deposit growth and non- interest income would be the thrust areas, the statement added.
Thrissur-based Dhanlaxmi Bank has chalked out strategies for growth by expanding its retail book. Shivan JK, Managing Director and CEO, is optimistic of achieving a good growth rate in the current fiscal. He says that the bank would continue to focus on CASA and retail advances including gold loans. The business volumes grew 6.39 per cent to ₹18,834 crore for the last fiscal. Edited excerpts:
What are your growth plans in the current financial year?
We will continue our focus on expanding our retail book through gold loan and other retail products. We have launched limited period MSME campaign. Our gold loan book is showing steady growth and with the launch of special 1/3-month product this book is gaining traction.
We are looking at an overall 12-15 percent growth with thrust on retail/ agri including microfinance and select MSME and corporate growth. Our liability franchise is robust, and we estimate steady growth in CASA and retail term deposits.
What is the position of NPAs of the bank? How has it progressed last year?
The GNPA position as on March 31, 2021, was 9.23 per cent. We are maintaining a provision coverage of 74.20 per cent.
The position has deteriorated from the previous year due to a low advance base and recognition of NPAs, which were under moratorium following the Supreme Court order on March 23. If we include the ‘proforma’ NPAs, we were at 10.82 per cent as at the end of Q3.
Most of these are small ticket NPAs with good security coverage. Due to lockdown, our recovery efforts are constrained. We are hopeful of bringing this level below 9 per cent by end of this quarter. And there are no major fresh slippages expected.
What is the impact of Covid on the bank’s business? What plans are in place?
The growth has been muted whereas asset deterioration has steadily increased. The moratorium and its sudden lifting added to the woes.
We have instructed our operating offices to maintain all Covid protocols and safety precautions. We are tying up with two private hospitals to ensure that all staff take at least the first dose of vaccine.
When do you see the economy recovering? Also do you see interest rates going up soon?
Our hope is that things return to almost normal from the second quarter of this fnancial year and then the economy will bounce back with a growth in GDP of 8-9 per cent for the FY as per revised predictions. As for your question regarding the interest rates going up, we have reached the bottom. But with the liquidity overhang and the time lag in corporate demand picking up, the rates would be stable in the short term but will firm up by Q3.
How about NRI investments in your business? And are there any plans for merger with bigger banks?
We are not a big player in the NRI segment compared to other peer banks. In this current financial year, it will be one of our focus areas. And, no, we don’t have any plans for merger with other bigger banks.
NEW DELHI: Private sector Dhanlaxmi Bank reported a net profit of Rs 5.28 crore in the fourth quarter of FY2020-21, up by over two-folds from a year ago. The bank had posted a net profit of Rs 2.60 crore in the year-ago same quarter.
However, the net profit during the reported quarter of FY21 was down sequentially by 55.3 per cent from Rs 11.81 crore in the December 2020-21 quarter.
Income during Q4FY21 fell to Rs 242.18 crore from Rs 280.98 crore in the same quarter of FY2019-20, Dhanlaxmi Bank said in a regulatory filing on Saturday.
For the entire fiscal year 2020-21, the bank reported a net profit of Rs 37.19 crore, which fell by 43.5 per cent from year ago’s Rs 65.78 crore.
Total income during the year was also down at Rs 1,072.23 crore from Rs 1,100.44 crore in FY20.
Bank’s asset quality showed deterioration with the gross non-performing assets (NPAs) spiking to 9.23 per cent of the gross advances by end of March 2021 as against 5.90 per cent by end of March 2020.
In value terms, the gross NPAs of the lender rose to Rs 657.21 crore from Rs 401.22 crore.
Net NPAs also soared to 4.76 per cent (Rs 322.92 crore) from 1.55 per cent (Rs 100.94 crore).
It reported an operating loss of R4.10 crore in the fourth quarter of last fiscal.
Dhanlaxmi Bank on Saturday reported that bad loans have increased significantly in the fourth quarter of FY21, with gross NPA ratio touching 9.23% as against 5.90% in the year-ago period.
The Thrissur-based lender reported a 103% year-on-year increase in its fourth quarter net profit to R5.28 crore, mostly on lower provisions for bad loans.
It reported an operating loss of R4.10 crore in the fourth quarter of last fiscal.
Provisions and contingencies have been reduced by almost 74% to R14.82 crore as against R56.89 crore provided in the year-ago period.
For the complete fiscal 2020-21, the lender reported a net profit of R37.19 crore, which is a 43.4% y-o-y drop from R54.78 crore reported in FY20.
Total income of the lender for the fourth quarter was R242.18 crore as against R280.98 crore reported in the fourth quarter of FY20.
Interest income and other income are also on the lower side when compared to the year-ago period.
On the asset side, the lender reported gross NPA ratio at 9.23% compared to 5.78% in Q3 and 5.90% in the year-ago period.
Net NPA ratio for Q4 FY21 stands at 4.76% as against 1.11% in Q3 and 1.55% in Q4 FY20.
Total deposits at the end of the forth quarter stood at Rs 11,699.15 crore, against Rs 10,904.07 crore in the year-ago period.
Dhanlaxmi Bank on Thursday said its advances increased 4.75% year-on-year (y-o-y) during the fourth quarter of the previous fiscal, while deposits increased of 7.29% during the same period.
The Thrissur-based lender’s gross advances touched Rs 7,121.94 crore as on March 31,2021, against Rs 6,798.89 crore as on March 31,2020, its said in a regulatory filing. Total deposits at the end of the forth quarter stood at Rs 11,699.15 crore, against Rs 10,904.07 crore in the year-ago period.
Meanwhile, the gold loan portfolio recorded an y-o-y increase of 48.13% during the fourth quarter. Sequentially, gold loan advances grew 5.6%.
Dhanlaxmi reported a 44.5% year-on-year decline in its third quarter net profit to Rs 11.8 crore, primarily because of higher wage bill and lower interest income.
Dhanlaxmi Bank appointed JK Shivan as the managing director and CEO on February 1 after an unprecedented move of taking shareholders’ approval by e-voting. Shivan tells Rajesh Ravi of FE in an interview that he wants to run the bank professionally and create value for shareholders.Excerpts:
There are many legacy issues in the bank and the RBI asked for shareholders’ approval before your appointment. How do you view the problems faced by the bank?
Many from the top leadership have resigned in the past and such things create governance and regulatory issues. My message is that executives will decide what has to be done in the bank and they will report to me. I do not want anyone, including shareholders and the directors, to interfere in the working of the bank.
I have been voted by shareholders and selected by an independent panel. There are two RBI directors on the board and this bank is under close supervision. The board is the supreme in any organisation and I report to the board. Since I have a chairman who is a former banker, I think things will be smoother and issues will be settled. At the end of the day, I want to run the bank professionally and create value for shareholders. This is a 95-year-old bank and you cannot run it like a fiefdom.
What is your assessment of the bank?
The bank has a capital to risk assets ratio (CRAR) of 14.4%. However, I would be happy with a CRAR of 12% and more profitability. Ideally, CRAR for a good private sector bank is 17%+. NPA position is not bad and we have made adequate provisions. I should give credit to the committee of directors which managed the bank, because despite all untoward incidents, no depositor has walked away.
How do you assess the third quarter results given that advances have shown a marginal decline?
Corporate advances are marginally lower while gold loans have increased by 48.64% year-on-year and now stand at 26.06% of the total loan book. The bank may focus on smaller-ticket loans with good collateral, and not push for bigger corporate loans under a consortium of banks where smaller banks don’t have much say.
I have 40-45 days left in this fiscal and I am focusing on improving CASA, recover as much as possible, increase retail gold loans and do whatever corporate loans I can do.
What about slippages and provisions? What is the proforma GNPA and NNPA for Q3?
The proforma GNPA in absolute terms would be around Rs 330-340 crore, out of which only Rs 130 crore is corporate advances. The rest are small advances and I am not worried about it. As a prudent measure, I have made a provision of Rs 37 crore. Our gross non-performing assets (NPA) as a percentage of gross advances for the quarter stood at 5.78% and the net NPA was at 1.11%. Proforma GNPA ratio would be 9% and proforma net NPA 2.1%.
Any plan to raise capital as the loan book is still small?
When we grow, we will have to think of capital. We will have to go to the board and decide how to raise capital. Maybe a rights issue or a follow-on public offer or something else. Sadly, the share market is not reflecting the intrinsic value of the bank. With good governance and steady growth, I think we will get good value.
What is the NIM for Q3, and what would be the ideal NIM?
During the third quarter, NIM reported is 2.9%, and ideally, we should have it above 3%. For the last 3-4 months, some of the money has been invested in treasury, and hopefully, we could see more advances and higher interest income in the coming quarter.
Have you any plans for branch expansion and hiring?
We had to close or merge many loss-making branches when the bank was under the Prompt Corrective Action framework. So, we can immediately open 30 branches. We are getting good traction from Andhra Pradesh and Tamil Nadu. The bank is currently short of 200 employees and we need to hire soon.
Dhanlaxmi Bank had reported a net profit of Rs21.28 crore in the third quarter of last fiscal and Rs14.01 crore in the second quarter of FY21.
Dhanlaxmi Bank on Tuesday reported a 44.5% year-on-year decline in its third-quarter net profits to Rs11.8 crore mostly on higher wage bill and lower interest income.
Provisions for wages and pensions of the Thrissur-based lender has increased by 40% YoY to touch Rs70.27 crore as against Rs50.13 crore reported in the year-ago period. The lender had reported a net profit of Rs21.28 crore in the third quarter of last fiscal and Rs14.01 crore in the second quarter of FY21.
JK Shivan, MD & CEO of the bank told FE that provisions for higher wage bill and slippages led to a decline in the profits. Total advances of the bank are seen marginally lower at Rs7099 crore, while corporate advances have come down by 13.92 % YoY.
Gold loan portfolio has increased by 48.64 % YoY and now stands at 26.06 % of the total loan book. Shivan added that the bank will increase its corporate advances in the current quarter. Total income stands flat at Rs286.21 crore as against Rs285.85 crore in the year-ago period.
Interest income has declined by Rs13.52 crore year-on-year to Rs237.36 crore, while other incomes have increased to Rs48.85 crore from Rs34.97 crore reported in the year-ago period.
On the asset side, the lender reported an improvement with gross non-performing assets (NPA) as a percentage of gross advances at 5.78 % from 6.36 % in the preceding quarter.While net NPA declined to 1.11 % in the December quarter from 1.66 % in the September quarter.
Provision Coverage Ratio of the bank as on December 31, 2020, was 92.68%.
Dhanlaxmi Bank gets new MD & CEO via electronic voting
Dhanlaxmi Bank said on Tuesday that the resolution to appoint JK Shivan as the next managing director and CEO of the bank was passed with an overwhelming majority of 99.81%. The bank in a regulatory filing said that 105 shareholders, who account for 99.81% the total votes cast, voted for the resolution, while 18 shareholders who account for 0.19 % of the votes opposed the resolution.
The bank Board had moved a resolution on December 26, as asked by RBI, for shareholders approval via electronic voting, for the appointment of Shivan as the next managing director and CEO the bank. The last MD and CEO of the bank Sunil Gurbaxaniwas voted out from the post of managing director and CEO of Dhanlaxmi Bank by more than 90% of the shareholders on October 1, in the first AGM held after he was appointed in February 2020.
The bank is currently managed by a committee of directors(COD) and RBI has given the bank four months to appoint a new head. RBI has to give the final approval for the appointment of Sivan, following which the Board of directors of the bank can officially appoint him as the MD and CEO, bank sources said. The tenure of the COD expires on January 31, 2021 and the RBI is likely to give an extension to the COD until the new MD and CEO takes charge.
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