The tug of war between Dhanlaxmi Bank’s large individual shareholders with roots in Kerala and the new management that is keen on roping in new shareholders, is apparently the reason the old generation private sector Bank is currently in a state of flux.

The All-India Bank Employees’ Association (AIBEA) had sought the intervention of the Reserve Bank of India in the affairs of the bank, stating that the new top management may be headed in the wrong direction, with its attempts to open more branches in northern States.

Though the Thrissur (Kerala) headquartered bank has recorded continuous profits for the last nine quarters and has a healthy capital position, shareholders feel the ongoing tussle could adversely affect the interests of the majority of the bank’s customers in Kerala and small investors. As at June-end 2020, Dhanlaxmi Bank’s large individual shareholders included B Ravindran Pillai (10 per cent stake), CK Gopinathan (7.50 per cent), Kapilkumar Wadhawan and Yussuffali Musliam Veetil Abdul Kader (5 per cent each).

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Since the bank is proposing to increase its Authorised Capital from ₹300 crore to ₹400 crore, to meet the requirement of additional capital to prepare for Basel-II & Basel III compliance, the existing shareholders want the capital raise to be in the form of a rights issue.

They reasoned that doing a qualified institutional placement (QIP) with outsiders could dilute their shareholding.

According to sources, the large individual shareholders picked up stake in Dhanlaxmi Bank at ₹75-90 apiece a few years ago . The current market price of the share is ₹12.87. A rights issue would ensure that they are able to retain their current shareholding.

Some Kerala-based shareholders alluded to some vested interests in the bank trying to bring in huge capital with the help of industrial houses and a Mumbai-based private sector bank, thereby giving them controlling stake.

The Kerala-based Bank wants to maintain its traditional identity and the existing shareholders are supportive of that, the sources said.

“Any devious attempt to bring the share capital from outside is trespassing into the rights of the existing shareholders. It will also change the culture of the Bank,” said one of the small shareholders.