Companies & Sectors
Dhanlaxmi Bank: Director K Jayakumar exposes top brass while resigning
In his resignation letter, the former Chief Secretary of Kerala alleged harassment and subsequent removal of dissenting independent directors for not toeing up the line by Dhanlaxmi Bank’s CGM Manikandan and MD & CEO G Sreeram
 
K Jayakumar, a retired Indian Administrative Services (IAS) officer, and former Chief Secretary of Kerala government has resigned from troubled Dhanlaxmi Bank. The IAS officer's hard hitting letter exposes the lack of proper management at the Bank, but also questions the role of banking regulator, Reserve Bank of India (RBI). 
 
The background to this is the anger and unhappiness of employees following the abrupt termination of PV Mohanan,  General Secretary of Dhanlaxmi Bank Officers' Organisation (DBOO) in June 2015, without specific reasons. Sources at the bank insist that the real reason for his removal was the expose of a fixed deposit scam to the tune of Rs240 crore that is being investigated by the Economic Offences Wing (EOW) of the police. The Bank employees struck work for 33 days at that time causing the government to intervene in the matter. But clearly, the mood at the bank as well as its method of managing things are far from conducive, as is evident from Mr Jayakumar's resignation and the contents of his hard hitting exit letter. 
 
Mr Jayakumar says, "In this depressing atmosphere of self-deception coupled with utter lack of sensitivity and grace, and poor appreciation of the values of human resources management and industrial relations, my self-esteem does not permit me to associate any longer with Dhanlaxmi Bank as a Director. Alarmingly enough, the Bank's business is shrinking, its revival plans are wobbling, its employees are alienated and frustrated and its HR policies and practices are amorphous and antiquated. Where an all-out effort to galvanize the Bank by enlisting the total cooperation of the staff to achieve a turnaround would have been a natural instinct, Dhanlaxmi Bank, sadly enough follows a bullish HR policy characterized by insensitivity and intimidation. Will arbitrary transfers, termination, selective rewarding of loyalty and such myopic strategies, which belie all modern human resources (HR) practices, bring glory to a Bank, which has not been able to post a profit in the past several years? As a Director, I feel helpless and sad. For the above reasons, circumstances and facts, I resign from the Board of Directors of Dhanlaxmi Bank". 
 
The former Chief Secretary also highlighted harassment meted out to a dissenting director by the Bank's Chief General Manager Manikandan, in particular and G Sreeram, Managing Director and Chief Executive, to a lesser extent. When Mr Jayakumar raised objections on unceremonious removal of PV Mohanan, who was working as Senior Manager in the Bank's Recovery Department at Thrissur, citing 'loss of confidence', he says, he "began to realize the outdated, if not feudal mind set of the top management, particularly Mr Manikandan, the CGM and to a lesser extent Mr Sreeram, CEO and MD".
 
"They seem to presume that the Directors have to be necessarily 'yes men'.  Any note different from 'his master's voice' is unacceptable. 'Dissent with dignity' seems to be unknown in their lexicon. Once a Director (who is paradoxically called Independent Director!) is suspected to have different views, then he has to be side lined if not humiliated. Then the transport department and other functionaries are instructed not to show elementary courtesies even about firming up travel plans for attending the Board meeting. Then that Director has to be removed from important Committees. Then it becomes a tested ploy to convey, in not so subtle ways, how poorly RBI thinks of him. This style was in evidence when a former Director, Mr K Vijayaraghavan, who used to dissent and often criticize, was shunted out of the Board last year as his re-nomination failed to receive support from the majority of shareholders!," Mr Jayakumar stated in his resignation letter.
 
Earlier in November 2014, while raising the issue of removal of Mr Vijayaraghavan with the RBI, the All India Bank Officers' Confederation (AIBOC) too had alleged misuse of power from the top management. AIBOC, in the letter had stated, "The case of removal of K Vijayaraghavan (former Director) is a classic example. At any time, the Board can oust the Chairman also by similar lobbying and may suggest the name of their own person as Chairman. Instead of the Chairman and the directors determining who should be the MD and CGM, it is happening vice versa- MD and CGM are selecting the Directors and the Chairman of the Bank. By selecting the directors by this mode, there is big erosion in the 'independent director' concept in Dhanlaxmi Bank. This is a dangerous trend because the much needed 'checks and balances' in the Bank's administration will be missing. This is a systemic issue, which has to be addressed and set right."
 
"Though the Bank could increase the capital substantially, the disadvantage is that the top two executives of the Bank, the present MD and CGM could develop a liaison with the investors, as it was they, who were negotiating with the big investors for investment in the Bank through private investments in public equity (PIPE) or qualified institutional placement (QIP). Using this clout the present MD and CGM determine who shall be the Director of the Bank," the Officers' union had alleged. 
 
Although the Officers’ Confederation sent the letter to the RBI in November 2014, nothing much seems to have changed in Dhanlaxmi Bank. Here is the letter sent by AIBOC to the RBI…
 
 
In his resignation letter, Mr Jayakumar further said, "...I have lost faith in the capacity of this management and its ethos that has missed the wood for the trees. I wonder why the initiatives approved by the Board and the several suggestions and admonitions of the RBI have repeatedly failed to yield the desired results. I am shocked by the abysmal lack of grace in dealing with difficult situations that ought to have been handled with sagacity and foresight. I am pained at the short-sightedness that fails to regard the commitment and contentment of the employees as paramount for the survival and success of the Bank in its darkest hour".
 
Commenting specifically on the dismissal of PV Mohanan, the IAS officer mentioned that he always had been a strong critic of the union leader, but never doubted personal integrity of Mr Mohanan. "I am no trade union leader holding a brief for Shri Monahan. But as an officer in the civil service for three and a half decades and having had several opportunities to deal with powerful trade unions and service organizations, I am of the view that the action of the management has been unfair and unjustifiable. The punishment of termination is unequal to the offences committed. What is the offence that has made nothing but dismissal from service the only befitting punishment? What is the public/ organizational purpose this act has achieved? The only message it conveys to the employees is ominous and depressing.  When the Bank is going through critically difficult times, any decision that fails to elicit the willing support and goodwill of the employees is unwise and short sighted.  A decision that does not have a direct or indirect beneficial impact on the institution cannot be morally justified. The insistence that Mr Mohanan should be forced out ignominiously has not served any productive purpose other than alienating the employees. This has been nothing but a thoughtless act that only vindicates the obstinacy of the management and has resulted in hardship and personal injustice for an individual. The decision epitomizes utter disregard to the morale of the employees," Mr Jayakumar had said.  
 
Our emails sent to the Bank's MD & CEO remained unanswered till writing this story. We will incorporate Dhanlaxmi Bank's comment as and when we receive it.

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COMMENTS

Ram Mohan

1 year ago

It is all interesting to note the fall of this private bank. But the writer is one director and we would like to know the views of others in the issue. Otherwise it can only be considered as a tactic to blame someone who was a partner in looting but the partnership became sour later. Government again failed to protect the public funds and am sure some of the ruling party too might be involved in sharing the booty.

PRAKASH D N

1 year ago

Kudos to Moneylife Team for exposing the hallow Corporate Governance in Private Sector Banks. P J Nayak Committee report recommends reduction
in Government control and doing away with dual control of Govt. and RBI in
PSBs for better governanace. Is the Dhanalakshmi type Board Governance is required for PSBs? In spite of the issue had been brought to the notice of RBI (by AIBOC), what the RBI has done? I learn that there are two RBI Directors on the Board of the DB. Were they remain mere spectators? If this is the
fate of Independent Directors in DB, it is high time RBI does a corporate governance audit of all the Banks. The way the Management deals with its human resource is fully reflected in the dismissal of the General Secretary
of officers' union (for whistle blowing) and how it handles a IR crisis. No need to search for the losses Bank is incurring for the past few years? Is there no accountability for the MD and other Board members? Are they not accountable to the share holders and depositors? RBI need to intervene to put the Bank on the right track.

SuchindranathAiyerS

1 year ago

An Edward, an Edward come to confession? But the very fact that this is dripping from the mouth of a Bureaucrat who must have been privy to the millions of crimes, that each Babu must countenance, and which, in their aggregate, make up the Indian Republic points to one simple fact. The Dhanalakshmi Bank, like Mr. Jayakumar himself, is just another fractal of India.

MG Warrier

1 year ago

Perhaps, we need to give more thought to mature views like "...I have lost faith in the capacity of this management and its ethos that has missed the wood for the trees. I wonder why the initiatives approved by the Board and the several suggestions and admonitions of the RBI have repeatedly failed to yield the desired results. I am shocked by the abysmal lack of grace in dealing with difficult situations that ought to have been handled with sagacity and foresight. I am pained at the short-sightedness that fails to regard the commitment and contentment of the employees as paramount for the survival and success of the Bank in its darkest hour" expressed by Jayakumar. Issues can get diverted and the seriousness can get diluted by dragging Subramanian Swamy's comments on Dr Rajan. Swamy has spoken a lot more after he had suggested a replacement for Dr Rajan and Dr Rajan has given many speeches after he had used 'Dosa' prices to explain inflation. Let us also move forward and think about proactive suggestions that can save the system.

Raja Laks

1 year ago

RBI Governor who used to comment about Dosa has not opened his mouth yet about this Bank.

Ultimately Banks come under Arun Jaitley ministry, so no hope. Earlier it was under the biggest thief P Chidambaram.

REPLY

Suketu Shah

In Reply to Raja Laks 1 year ago

Mr Rajan was appointed by PC and hence is obligated to him.No wonder you see this kind of performance(or rather lack of it) from him.Dr Swamy clearly stated 1 yr ago rajan has to go and fast and wait for more such inaction by RBI to come out now that Rajan's term is getting over

Suketu Shah

In Reply to Raja Laks 1 year ago

Perfectly said.What else can you expect of a man like Rajan who one of our topmost honest leaders Dr Swamy had stated 1 yr ago that he had to go and fast.Rajan has only lived up to our expectations.

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