Is Reliance - Anil Dhirubhai Ambani Group (R-ADAG) again eyeing Dhanalakshmi Bank? If the rumours are true this time, Dhanalakshmi Bank will become the second Kerala based bank after Catholic Syrian Bank to develop insecurity, despite having a not-so-bad history.
Ever since he changed over to Dhanalakshmi Bank from Reliance Capital Asset Management Company, a Reliance-ADAG company, Managing Director Amitabh Chaturvedi has battled suspicions that a buyout by R-ADAG is imminent. Despite many refutals, the controversy refuses to die down, taking into account the advantages Anil Ambani would have with a small bank in his fold.
And Dhanalakshmi Bank is no ordinary small bank. It has a history of 82-years, an uncommon feature in the country’s private sector banking.
However, after Amitabh Chaturvedi took over the helm, Dhanalakshmi Bank has been trying to shrug off its traditional roots and re-brand as a new generation bank. The wisdom of that move is doubtful, considering their traditional and community-oriented shareholders and customers, as well as the unreliable brand image of many new generation banks.
If the Reliance-ADAG takeover rumours are true, Dhanalakshmi Bank will be the second Kerala based bank to face a similar situation, with Federal Bank trying to take over Catholic Syrian Bank.
Amitabh Chaturvedi has expressed plans to grow Dhanalakshmi Bank even by 100% to bring it within the first-five segment of private banks. But with no inorganic opportunity in the horizon, the achievability of this plan is doubtable.
Dhanalakshmi Bank recently announced a venture fund with Rs. 2000 crore corpus, a move that will give it a better long-term investment view in selected companies. The fundamentals are also good with profit for 2008-09 nearly doubling over the previous year, making it attractive for deep-pocketed investors like Reliance-ADAG.
However, some recent strategies of Dhanalakshmi Bank are enigmatic.
Even in a recessionary environment, Dhanalakshmi Bank has announced plans to double its employee base by recruiting 1300 new people. The safety of this move is not clear, taking into account the level of performance-linked wage structure in place at the bank.
Dhanalakshmi Bank had also recently entered into an exclusive deal with Bajaj Allianz to distribute their insurance products. It was a rather strange strategy as no other private bank is relying on a single insurance brand. Moreover, many peer banks are entering the insurance management business and not just the insurance distribution business.
Until recently, Dhanalakshmi Bank exhibited surprising lethargy in decisively moving forward. The Board’s reluctance to reduce a major shareholder’s stake below 10%, as well as to increase their net worth above Rs. 400 crores were surprising, as it prevented further branch expansion as per RBI norms. Similar was the case with the long delay in removing the chit clause from Dhanalakshmi Bank’s MoA. Now these three issues stand solved. But investors and customers can’t be blamed for suspecting that further such surprises might be there in the bank’s books.
And Dhanalakshmi Bank is no ordinary small bank. It has a history of 82-years, an uncommon feature in the country’s private sector banking.
However, after Amitabh Chaturvedi took over the helm, Dhanalakshmi Bank has been trying to shrug off its traditional roots and re-brand as a new generation bank. The wisdom of that move is doubtful, considering their traditional and community-oriented shareholders and customers, as well as the unreliable brand image of many new generation banks.
If the Reliance-ADAG takeover rumours are true, Dhanalakshmi Bank will be the second Kerala based bank to face a similar situation, with Federal Bank trying to take over Catholic Syrian Bank.
Amitabh Chaturvedi has expressed plans to grow Dhanalakshmi Bank even by 100% to bring it within the first-five segment of private banks. But with no inorganic opportunity in the horizon, the achievability of this plan is doubtable.
Dhanalakshmi Bank recently announced a venture fund with Rs. 2000 crore corpus, a move that will give it a better long-term investment view in selected companies. The fundamentals are also good with profit for 2008-09 nearly doubling over the previous year, making it attractive for deep-pocketed investors like Reliance-ADAG.
However, some recent strategies of Dhanalakshmi Bank are enigmatic.
Even in a recessionary environment, Dhanalakshmi Bank has announced plans to double its employee base by recruiting 1300 new people. The safety of this move is not clear, taking into account the level of performance-linked wage structure in place at the bank.
Dhanalakshmi Bank had also recently entered into an exclusive deal with Bajaj Allianz to distribute their insurance products. It was a rather strange strategy as no other private bank is relying on a single insurance brand. Moreover, many peer banks are entering the insurance management business and not just the insurance distribution business.
Until recently, Dhanalakshmi Bank exhibited surprising lethargy in decisively moving forward. The Board’s reluctance to reduce a major shareholder’s stake below 10%, as well as to increase their net worth above Rs. 400 crores were surprising, as it prevented further branch expansion as per RBI norms. Similar was the case with the long delay in removing the chit clause from Dhanalakshmi Bank’s MoA. Now these three issues stand solved. But investors and customers can’t be blamed for suspecting that further such surprises might be there in the bank’s books.
That's a speculation . RBI regulations are clear - Financial Houses not allowed in Banking .
ReplyDeleteIt is according to RBI regulations that major shareholder should be below 10%..which was followed and now a professional board in place.
I agree, there was lethargy but with a new team in place the bank has performed and profits have approx doubled every quarter.
Let us wait and watch before jumping to conclusion
Mr Anil Ambani can change entire financial scenario of the country if he enters into banking sector. The reliance also can substantiate its position stronger than any other group in the country. The biggest market in the country-urban, semi urban and small towns still under the cluches of Govt and old generation banks. Only reliance with its broad network and manpower can enter into this field and show the door to the people who always run behind bigger cities.
ReplyDeleteWhen the big keys like Anil Ambani who enters in the financial banking sector can have a better coverage unlike others who still not sufficient to clutch the unutilised pockets in terms of financial inclusion.SO BE WAIT FOR THE SAME TO HAPPEN WHICH WILL THRESHOLD THE INDIAN PRIVATE BANKING ENTITY...
ReplyDeleteI dont like to loose our property as we are fighting against federal bank merger with catholic syrian bank . my forefathers created this finantial institutions with their vision for a bright future for our land Thrissur . Only the Thrissur , Kerala based banks like Catholic Syrian Bank , South Indian Bank & Dhanlakashmi bank , ( also some other older banks ) has a good status than the next generation banks in people's inner mind . it has been formed with its responsibilities . If we are not looking after those as needed it will be taken and we will be forced to hand over to foreign institutions and they will mix their culture with it and kills the old . thats why so many mergers are taking place and some good banks are remained to count on your fingers that too with a high stress . if foreign takeover are happening our guys will be de promoted or the authorities will be their guys we will have to obey their rules and procedures . it wont be an ethical value ba it sed .will be just for business . hand overing to the mightiest . The Thrissur will be promoting all type of financial institutions . Its like land of Finance , culture , festival , ... . The concept of chits ( kuri ) is from Thrissur . We have to protect our nation , people , finance bcoz without finance in the coming future nothing can be happened . so we can think and do for our nation . without loosing moral values by seeing so much money as selfish .
ReplyDeleteMohan Bhat said ...
ReplyDeletewhoever interested in any bank, they aslo have to take over and continue bank's long cherished tradition for the satisfaction of its stakeholders which includes shareholders and customers alike and make the idea successful.