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Dhanlaxmi Bank Ltd

BSE: 532180 | NSE: DHANBANK ISIN: INE680A01011
Market Cap: [Rs.Cr.] 487.08 Face Value: [Rs.] 10
Industry: Banks - Private Sector

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Director's Report
Directors' Report

To The Members,

The Board of Directors is pleased to place before you, the 87th Annual Report of the Bank along with the Audited Balance Sheet as at March 31, 2014 and the Profit and Loss Account for the year ended on that date.

Performance Highlights

The salient features of the Bank’s performance for the financial year ended March 31, 2014 are:

• The total Deposits of the Bank increased from Rs. 11202.13 crore as on 31.03.2013 to Rs. 12133.21 crore as on 31.03.2014

The total Advances of the Bank increased from Rs. 7954.00 crore as on 31.03.2013 to Rs. 8205.76 crore as on 31.03.2014

• Achieved operating profit of Rs. 6.07 Crore for the financial year 2013-14

• Interest expended reduced by Rs. 19.75 Crore during the financial year 2013-14 as compared to previous FY 2012-13

• Net NPA at 3.80% and Gross NPA at 5.98%.

• Basel II CRAR at 10% and Basel III CRAR at 8.67%.

• Book value per share is Rs. 58.47.

Capital and Reserves

The Bank’s Paid up capital and reserves is Rs. 736.32 crore as on 31.03.2014. The capital adequacy ratio as per Basel II and Basel III was 10% and 8.67% respectively.

During the year the Bank had issued and allotted 4,07,98,300 Equity shares of Rs. 10 each for an aggregate amount of Rs. 183.98 crore (including premium) by way of Qualified Institutional Placement and Preferential issue of shares to augment capital funds to further improve our Capital Adequacy Ratio.

Total Business

The Total Business of the Bank as on 31.03.2014 stood at Rs. 20338.97 crore as against Rs. 19156.13 crore as on 31.03.2013 and registered a growth of 6.17%.


The total deposits of the Bank increased to Rs. 12133.21 crore from Rs. 11202.13 crore as on March 31,2013 registering a growth of 8.31%


The Bank’s total advance increased from Rs. 7954.00 crores as on 31.03.2013 to Rs. 8205.76 crores as on 31.03.2014 registering a growth of 3.17%.

Priority Sector Advances

The Bank continued its efforts during the year in facilitating the growth of the productive sectors of the economy. Priority sector advances increased from Rs. 2572.65 crore as at the end of March 2013 to Rs. 2933.93crore as at the end of March 2014. The Bank’s priority sector advances stood at 36.14% (an increase of 7.07% over March 2013) and its agricultural advance reached 19.19% of the adjusted net bank credit. The weaker section advances was at 13.62%, thus surpassing the prescribed norm of 10%. Lending under various socioeconomic schemes has shown satisfactory progress.


The bank’s operating profit during the year was Rs. 6.07 crore as against Rs. 51.40 crore during the previous year. The bank declared a net loss of Rs. 251.91 crore during the year under report as against net profit ofRs. 2.62 crore during the previous year.


In view of the net loss recorded by the Bank during the year, regrettably no dividend could be recommended to the shareholders.

Non-Performing Assets

The continued global recession during the FY 2013-14 had its adverse impact on Indian Economy. This, along with some issues specific to the Bank, affected the borrowers of the bank, leading to an unprecedented rise in non-performing assets. The various monitoring/recovery measures employed by Bank helped it much in restricting further slippages into NPA and ensuring good recovery from the existing NPA accounts. During the year the new slippage to NPA in our Bank was. Rs. 488.08 crore, in comparison with the figure of Rs. 504.78 crore during the previous year. The total recovery in NPA during the current fiscal was. Rs. 312.20 crores. The corresponding figure for the previous year was Rs. 227.71 crore. The current year recovery includes assignment of 32 assets of 14 borrowers to Assets Reconstruction Company with gross NPA of value Rs. 102.86 crore. from the books of the Bank. The process will continue, studying each case individually. The automation process in NPA identification has turned to be a complete success due to concerted efforts of Recovery and IT Teams.

Customer Service

The Bank attaches the highest importance to the quality of customer service rendered across its branches / offices. It has taken a series of measures during the year through deployment of techonology for significantly enhancing service quality. A well defined and full-fledged Customer Grievance Redressal Mechanism is put in place in the Bank.

The Customer Service Committee of the Board monitors the implementation of customer service measures periodically. Customer Service Committees comprising of Bank personnel as well as our constituents have been formed at the apex level and at branches for monitoring service quality and bringing about improvements in this area on an ongoing basis. The Bank has a 24 x 7 Phone Banking Call Centre at Thrissur as an outsourced model to cater to customer needs across the country.

The Bank is a member of Banking Codes & Standards Board of India (BCSBI) and is actively implementing the Code of Commitment to Customers as also the Code for Micro and Small Enterprises formulated by the BCSBI. In the annual Compliance survey conducted by BCSBI on implementation of BCSBI Code, the Bank has achieved "Above Average" rating for compliance amidst total 48 banks (including public sector, private sector and foreign banks) surveyed across the major parameters such as customer centricity, information dissemination, customer feedback and transparency. Also the Bank has been successful in achieving a "High Level" of compliance with regard to the "Grievance Redressal" segment thereby placing us amongst the top five private sector banks on the said parameter.

During the financial year 2013-14, the Bank received 6462 complaints as against a total of 8686 complaints received in the previous financial year. The organized structure for handling complaints at Branches, Regional offices, ATM Reconciliation Desk, Call Centre and Corporate Office who are in turn handling all transactions and services for the customers has helped the Bank in better customer service and reduction in number of complaints.

Branch Expansion

The Bank’s customer outlets stood at 676 as on 31.03.2014, comprising 266 branches, 396 ATMs and 12 processing centres 1 treasury 1 ARB. No branch or ATM was opened during the year. We have concentrated on consolidating our operations across the country and thereby aiming at utilizing our branches to their fullest potential

Damodaran Committee on Customer Service

The Reserve Bank of India had constituted a Committee under the Chairmanship of Shri. M Damodaran, former Chairman, SEBI to interalia:

• Examine the functioning of Banking Ombudsman Scheme-its structure, legal framework and recommend steps to make it more effective and responsive

• Review the role of Board of Directors of banks and the role of Regulators in customer service matters.

• Evaluate the existing system of grievance redressal mechanism prevalent in banks, its structure and efficacy and recommend measures for expeditious resolution of complaints. The committee may also lay down a suitable time frame for disposal of complaints including last escalation point within that time frame.

• Examine the possible methods of leveraging technology for better customer service with proper safeguards including legal aspects in the light of increasing use of Internet and IT for bank products and services and recommend measures to enhance consumer protection.

• Review the existing system of attending to customer service in banks - approach, attitude and fair treatment to customers from retail, small and pensioners segments.

We have received a total of 107 recommendations from the Committee since inception. Out of the 100 recommendations applicable to your bank, we have implemented 85 recommendations and the implementation of remaining items is in process.

Particulars Contact Centre RO & CO ATM Recon Banking Ombudsman Total
No. of Complaints Outstanding At the Beginning of the Year 12 1 0 4 17
No. of Complaints Received during the year 3138 372 2897 55 6462
No. of Complaints Resolved during the year 3141 366 2862 57 6426
No. of Complaints Pending during the year 9 7 35 2 53

The following important products and services were introduced during the year for the benefit of the customers:

• New Retail Internet Banking facility was launched to serve the customers in a better way. The salient features of this facility include NEFT/RTGS Payments facility, option to do loan repayment, online password generation facility, fund transfer facility within the bank, online deposit process, ATM/ Debit card related request facility, payment gateways, payment history, standing instructions view/modification, opening of Term deposits and recurring deposits, multiple browser support and new look and feel by way of Graphical User Interface changed across all pages also One Time Password (OTP) for consummating all the financial transactions to make it more safe and secure.

• Single Point Contact (SPC) has been identified at branches for Internet banking related issues to ensure that the customer issues are attended properly in time. Have also introduced registration for internet banking via scanned Channel Request Form (CRF).

• Phase II of Mobile Banking facility has been launched with enhanced features, Mobile and DTH Recharge facility, Mobile Shopping and Bill Payments system, ATM Card Hotlisting facility, Reissuance request facility for debit card, facility to request debit card pin and facility to view details and payment data of Dhanlaxmi Bank Credit cards with enhanced daily and monthly transaction limits for financial transactions.

• M/s. KSCEWWFB has authorized our bank to collect the subscription amounts from their 12 district offices linked to our branches. All the 12 linked branches were advised to collect the subscription amount from the district offices of Kerala Shops and Commercial Establishments Workers Welfare Fund Board (KSCEWWFB). The process will enhance the growth under CASA.

• The Bank has launched PoS (Point of Sale) machine facility for our customers, effective from 1st January, 2014. We have partnered with M/s BTI Payments (P) Ltd, Bangalore, for deploying POS machines.

• Flashremit tie up with UAE Exchange Centre LLC AbuDhabi was entered, which facilitates instantaneous credit to our customer’s account and provides credits to non- bank customers account within the cut- off time for NEFT payments.

• In order to meet the working capital requirements of Traders segments, we have launched Dhanam Business Loan product. This is a demand loan repayable in maximum of 5 years, subject to annual review or running account repayable on demand in the form of secured CC/overdraft subject to annual review/renewal. The limit for lending to Priority sector has also been enhanced.

• Daily ATM Cash Withdrawal limit and POS Limit for Classic 1 Debit Cards issued towards normal CASA Accounts was enhanced.

• A new on-line Business Correspondent model using the latest "tablet" technology has been launched.

• The Bank is now Aadhaar complied and offers Aadhaar based payment services. We facilitate Direct Transfer of cash subsidy / benefits from various government schemes.

• To ensure that service to our valued customers is not affected for want of PAN, we have entered into an arrangement with UTI-ITSL (UTI Infrastructure Technology and Services Ltd) for obtaining PAN number for our valued customers as well as walk-in customers. We have been enrolled as Pan Service Agent (PSA) and the Agency Code Number allotted to us is 3KRV 1057.

• Special Banking services at Sabarimala like last year with additional facilities like managing a multilingual information center (4 southern languages) at Sannidhanam to make the pilgrims aware about the various facilities available at Sabarimala. POS machines and Payment gateways to help the devotees for making donations.

• Online Portal was launched by Travancore Devaswom Board (TDB) in alliance with our Bank through which devotees can do online booking / reservation of accommodation and poojas at Sannidhanam. The site provides with the payment modes like DD, Cash, NEFT, and Payment Gateway (agreement process underway).

• The Bank has introduced w.e.f. 21.01.2014, a new facility to customers for knowing their account balance through a missed Call. The customer will get an SMS alert informing his account balance when he / she gives a missed call to the given number from his / her registered mobile number. This is a less time consuming, effortless and costless and speedy way for a customer to know his balance in the account.

• We have launched Pay - Smart to facilitate Fee / Chit collection for our clients. Pay Smart enables smart management of the customer’s collections and there are smart options for payments.

Investor Education and Protection Fund

During the year the Bank had transferred the unclaimed, unpaid dividend for the year 2005-06, an amount of Rs. 6, 20,149/- to the Investor Education and Protection Fund (IEPF) constituted under Section 205C of the Companies Act, 1956.

Listing on Stock Exchanges

The Equity shares of the Bank are listed on the Bombay Stock Exchange Ltd., National Stock Exchange Ltd., and Cochin Stock Exchange Ltd. The Bank confirms that it has paid the listing fees to all the Stock Exchanges for the year 2013-14.

The Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1968

The provisions of Section 217(1)(e) of the Companies Act, 1956 relating to conservation of energy and technology absorption do not apply to the Bank. However, the Bank is constantly pursuing its goal of technological upgradation in a cost efficient manner for delivering quality customer service.

The Company, being a banking company and an Authorised Dealer in Foreign Exchange, has taken all possible steps to encourage export credit.

There are no such employees whose particulars are required to be given in terms of Section 217(2A) of the Companies Act,1956 read with the Companies (Particulars of employees) Rules 1975 as amended vide GSR 289(e) March 31, 2011[Companies (particulars of Employees) Amendment Rules 2011]

Green Initiatives in Corporate Governance

As a responsible corporate citizen, the Bank supports and pursues the ‘Green Initiative’ of the Ministry of Corporate Affairs ("MCA"). In conformance with such initiatives, the Bank will effect electronic delivery of documents including the notice and explanatory statement of Annual General Meeting, Audited Financial Statements, Directors’ Report, Auditors’ Report etc., for the year ended March 31, 2014, to the email address which the shareholders have previously registered with their Depository Participant (DP) as their valid e mail address. Investors desirous of refreshing /updating their e mail addresses are requested to do so immediately in their respective DP accounts. The e-mail addresses indicated in respective DP accounts which will be periodically downloaded from NSDL/CSDL will be deemed to be their registered e mail address for serving notices/documents including those covered under section219 of the Companies Act, 1956.

Shareholders holding shares in physical form desirous of availing electronic form of delivery of documents are requested to update their e mail addresses with Bank’s Registrar and Transfer Agents by a written request if they wish to avail this facility. A request format for registering e-mail ids with the Registrar is enclosed. Shareholders holding shares in demat segment are requested to inform their e-mail ids to their respective DPs.


Transactions processed through the Core Banking Solution is monitored for detecting suspicious transaction using Infrasoft Technologies - AML application, to discharge the obligation cast on the Bank under Prevention of Money Laundering Act.

The Offsite Monitoring Teams set up for post facto verification of KYC Compliance while establishing new customer relationships by the branches are stabilized fully now.

The Bank has attached great importance to compliance of KYC/AML/CFT norms by the customers as per the Reserve Bank of India directive, in the interest of nation.

Change in the Board

Mr. Chella K Srinivasan and Mr. K. Jayakumar were inducted to the Board of Directors w.e.f 17.05.2013 as Additional Directors. Mr. K. Vijayaraghavan and Mr. P. Mohanan, who were Additional Directors, were appointed to the officeof Director liable to retire by rotation along with Mr. Chella K Srinivasan and Mr. K. Jayakumar at the 86th Annual General Meeting of the Bank held on 27.08.2013.

Mr. Manoranjan Dash was appointed by Reserve Bank of India as Additional Director from 23.05.2013 and he held officetill 31.10.2013. Mr. Raja Selvaraj was appointed by Reserve Bank of India as Additional Director from 01.11.2013.


The shareholders at the 86th Annual General Meeting held on August27, 2013 appointed M/S Sagar and Associates, Chartered Accountants, Hyderabad as the Central Auditors for the audit of Bank’s account for the year 2013-14 M/S Sagar and Associates, Chartered Accountants, Hyderabad vacate office at the end of Annual General Meeting to be held this year but are eligible for reappointment for the financial year 2014-15.

Explanation for Auditors’ comments in the Report.

The Auditors’ report for the year 2013-14 does not contain any qualifications. However, there are following matters of expressions.

Expression of matter

Without Qualifying our opinion, we draw attention to:

(a) Note No.19 of the Schedule 18 to the financial statements, regarding deferment of pension liability and gratuity liability of the Bank, pursuant to the exemption granted by the Reserve Bank of India from application of the provisions of Accounting Standard (AS) 15, Employees Benefits vide circular No. DBOD.BP.BC/80/21.04.018/2010- 11,Dated 09-02-2011 on ‘Re-opening of Pension Option to the employees and Enhancement in Gratuity Limits-Prudential Regulatory Treatment". Accordingly, out of the unamortized amount of. Rs. 10.21 crore as on 01/04/2013, the Bank has amortized. Rs. 3.15 crore for pension and Rs. 1.96 crore for Gratuity being proportionate amount for the year ended March31,2014 and balance amount to be amortized in future periods for Pension is Rs. 3.14 core and Gratuity is Rs. 1.96 crore.

(b) Note No. 26 of the Schedule 18 to the financial statements, which describes creation of Deferred Tax Liability (DTL) on Special Reserve under section 36(1)(viii)of the Income Tax Act,1961 pursuant to RBI’S Circular No.DBOD.No.BP. BC.77/21.04.018/2013-14 dated December 20,2013, whereby the DTL of Rs. 2.03 crore pertaining to periods upto March 31,2013 has been adjusted to the general reserve of the Bank in accordance with the accounting treatment prescribed by the Reserve Bank of India.

(c) Note No. 27 of the Schedule 18 to the financialstatements, regarding reconciliation of few general ledger balances in Other assets(Schedule No:11) Exchange fluctuations (Schedule No:5) and physical verification of Fixed Assets (Schedule No:10) is in progress

Since the above comments are self explanatory, no explanation is offered in this regard.

Management Discussion and Analysis Report

This has been dealt with in a separate section in the Annual Report

Director’s responsibility statement

Pursuant to the requirement under Section 217(2AA) of the Companies Act,1956 with respect to the Director’s Responsibility Statement, it is hereby confirmed that:

1. In the preparation of annual accounts for the financial year ended March 31,2014, the applicable accounting standards have been followed and proper explanation has been furnished to the extent of departures from these standards.

2. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year 2013-14 and of the profit/loss of the Company for that period.

3. The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 and Banking Regulation Act, 1949 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

4. The Directors have prepared the annual accounts for the financial year ended on March31, 2014 on a going concern basis.


The Board of Directors places on record its gratitude to the Government of India, Reserve Bank of India, State Governments, Securities and Exchange Board of India and other Regulatory bodies including stock exchanges where the Bank’s shares are listed for their support and guidance. The Board also places on record its gratitude to the bank’s customers, shareholders, other stakeholders and well wishers for their valued patronage. The Board expresses its sincere appreciation for the dedicated services rendered by officers and employees of the bank at all levels.

By Order of the Board
Place: Thrissur Sd/
Date: 14.08.2014 (Tekkar Yashwanth Prabhu)

Annexure to Directors’ Report for the year ended March 31, 2014

Statutory Disclosures Regarding ESOP

A. Summary

Sr. No. Particulars ESOP Scheme
1 Number of options granted 3,999,225
2 The Pricing Formula Closing price prior to the date of meeting of the Remuneration Committee in which the options are granted, on the Stock Exchange where there is highest trading volume on the said date
3 Number of options vested 725,615
4 Number of options exercised 20,719
5 Total number of shares arising as a result of exercise of options 20,719
6 Number of options lapsed 3,252,891
7 Variation in the terms of options NA
8 Money realised by exercise of options (Rs.) 2,452,094
9 Total number of options in force 725,615
B. Employee-wise details of options granted to
(i) Senior managerial personnel No options were granted during the current year
(ii) Employees who were granted, in any one year, options amounting to 5% or more of the options granted during the year No options were granted during the current year
(iii) Indentified employees who were granted options, duringNo options were granted during the current year any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant
C. Diluted Earning per Share pursuant to issue of shares
on exercise of options calculated in accordance with Accounting Standard (AS) 20 (26.45)
D The impact on the Profits and EPS of the fair value method is given in the table below Rs.
Profits as reported (2,519,141,000)
Add - Intrinsic Value Cost 0
Less - Fair Value Cost (10,572,554)
Profits as adjusted (2,508,568,446)
Earnings Per Share (Basic) as reported (26.45)
Earnings Per Share (Basic) adjusted (26.34)
Earnings Per Share (Diluted) as reported (26.45)
Earnings Per Share (Diluted) adjusted (26.34)
E. Weighted average exercise price and fair value of options
Weighted average exercise price of options whose
(a) Exercise price equals market price
(b) Exercise price is greater than market price No options were granted during the current year
(c) Exercise price is less than market price
Weighted average fair value of options whose
(a) Exercise price equals market price
(b) Exercise price is greater than market price No options were granted during the current year
(c) Exercise price is less than market price
F. Method and Assumptions used to estimate the fair value of options granted during the year
No options were granted during the current year
Futures & Options Quote
Future Data Not present
Key Information

Key Executives:

P Mohanan , Director

T Y Prabhu , Chairman

K Jayakumar , Director

Chella K Srinivasan , Director

Company Head Office / Quarters:

PB NO 9 Dhanalakshmi Buildings,
Phone : Kerala-91-487-2335177/04/31/90/6617000 / Kerala-
Fax : Kerala-91-487-2335580/2335367/6617222 / Kerala-
E-mail : investors@dhanbank.co.in/share@dhanbank.co.in
Web : http://www.dhanbank.com


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Plot No 17-24 ,Vittal Rao Nagar ,Madhapur ,Hyderabad-500081

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