Dhanalakshmi Plans Rights To Up Net Worth

Dhanalakshmi Bank has decided to float a rights issue by the end of this financial year to scale up its net worth to the Reserve Bank of India's stipulation of above Rs 100 crore. Karvy Investor Services Ltd has been appointed as the lead manager to the issue.

The company plans to raise Rs 27.47 crore by offering 4 shares of Rs 10 each at Rs 5 premium for every 3 shares held. The bank's scrip today ended at Rs 18 on the Bombay Stock Exchange.

T M Venkataraman, chairman of the bank, said, "The net worth of the bank now stands at Rs 78.15 crore. According to the RBI guidelines, this should be above Rs 100 crore." He was here to inaugurate the bank's maiden branch.

The rights issue is also in line with the bank's cash management system that was introduced to streamline operations.

The bank is planning to reduce high-cost deposits from 11 per cent to below 8 per cent by March 2002. Further, it also plans to concentrate on short-term deposits keeping in mind the falling interest rates worldwide.

Venkataraman said, "Generally, all banks in the south have high exposure to non-residential Indian deposits that give high returns. But our exposure to these deposits is not more than 12 per cent. Moreover, we are bringing down the amount of certificate deposits which also give high returns."

The bank is also rejigging the clientele. It is going to introduce sub-PLR rates to boost credit offtake.

On the non-performing assets (NPAs) side, the bank has made higher provisioning during last year. By the end of this fiscal, it plans to bring down the NPAs to 9 per cent from current 11 per cent.

Venkataraman said we would also foray into selling life and general insurance products and we are already in the process of tying up with corporate agents for this purpose.

The bank plans to increase presence in the northern and western parts of the country. In Kolkata, it is opening three more extension counters, which will be turned into branches later.