Q&A: Amitabh Chaturvedi, Dhanlaxmi Bank

'The financial inspection report wasn't a matter of concern'

A section of the Dhanlaxmi Bank employees’ union recently alleged the Thrissur-based lender had resorted to window dressing its financial accounts. In an interview with Abhijit Lele and Somasroy Chakraborty, managing director and chief executive Amitabh Chaturvedi dismisses these allegations, saying the annual regulatory inspection did not find any irregularities in its books. Edited excerpts:

There are reports that the Reserve Bank of India (RBI) inspected your accounts and came up with a 15-point action plan for efficient monitoring.
RBI had carried out an annual financial inspection, and we got the report in July. It is not unusual. RBI does this for all banks and financial institutions that come under its regulations. It talks about various things, including areas in which the bank can improve its efficiency and performance.

Does this validate unions’ claim that the bank's financial position is weak?
There was nothing in the annual financial inspection report that is a matter of great concern. It does not say the bank is on the brink of a collapse, or needs to change its auditors. Any such claim is completely false. The report highlights areas in which we can improve our performance — strengthen the capital adequacy ratio and reduce non-performing assets.

Do you plan to raise capital in the near term?
Our capital adequacy ratio was 10.7 per cent at the end of September. We plan to raise about Rs 300-400 crore in the fourth quarter of this financial year. We will raise both Tier-I and Tier-II capital. We aim to increase our capital adequacy ratio to 12 per cent by March-end.

Are you seeing stress on the quality of loans? What is your exposure to sectors like aviation and power?
We don't have exposure to the power industry, except in Tamil Nadu State Electricity Board. Being a medium-sized bank, our capability to lend to a large project with a high gestation period is limited. Our exposure to the aviation sector is nil. For export-related companies like textiles, there is stress. However, so far, we have not seen any significant rise in non-performing assets.

Some of your peers have increased the savings deposit rate. When would Dhanlaxmi Bank decide to do so?
It is not a question of increasing the savings deposit rate by 150-200 basis points and mobilising Rs 1,000-2,000 crore savings deposits. In financial services, someone who pays a higher rate of interest is perceived as a weak player. If the interest rate was the only criterion for expanding liabilities, all the money would have gone to the co-operative sector. The reality is the rate would go up. But this would be based on a well thought out strategy from our profit-and-loss point of view.