Dhanlaxmi Bank Director Resigns Citing Unethical Business Conduct

Sridhar Kalyanasundaram also referred to board factionalism, whistle-blower issues and the 'belligerent attitude' of CEO.

<div class="paragraphs"><p>Dhanlaxmi Bank branch in Mumbai. (Source: BQ Prime)</p></div>
Dhanlaxmi Bank branch in Mumbai. (Source: BQ Prime)

Dhanlaxmi Bank Ltd.'s independent director Sridhar Kalyanasundaram has resigned from the board with effect Sept. 16., citing "factionalism" to "unethical" business conduct.

Kalyanasundaram, appointed on Dec. 5, 2022, also referred to whistle-blower issues, rights issue of the bank and the "belligerent attitude" of Shivan JK, managing director and chief executive officer, among other reasons for his exit, according to the company's exchange filing.

"There are many instances where despite the value of the inputs given, my inputs have been deliberately negated/avoided/overruled by the other members of the board, just to support the belligerent attitude of the MD & CEO - who is on public record (in the vernacular press) that he cares little for shareholders and the directors," he said in his resignation letter.

In the letter, Kalyanasundaram said that the rights issue of the bank had been held up for over nine months due to various issues.

"I had advised the irregularities in the manner that the MD and the company secretary were conducting the board and committee meetings deciding on the agenda and the frequency of the same, at both the meetings of the independent directors," Kalyanasundaram wrote. "It was brushed away as 'not a serious issue'."

The former independent director also raised the "probity and lack of consensus" on the various whistle-blower issues, as a reason of resignation. He said that despite the board receiving numerous complaints, they have been dismissed.

"Some of such complaints have included even issues like "material suppression of facts by some board members" themselves (including references to items like notdeclaring an income tax raid in his fit and proper statement by a particular board member)," according to the resignation letter uploaded on the exchange.

The letter also alleged unethical business conduct, especially via the one-time settlement scheme.

"While the OTS scheme has been put to use to a great deal of success by the banking sector at large - to effectively deal with the NPA positions - it has been seen being used even where it had no impact on the NPA position of the bank (Dhanlaxmi Bank), by its executives," the letter read.

Kalyanasundaram ceased to be the independent director from Sept. 16, the day the bank received his letter of resignation.