Dhanlaxmi Bank plans to raise Rs 100 crore Tier-2 capital in October

Thrissur-based lender Dhanlaxmi Bank is planning to raise a Tier-2 capital of Rs 100 crore in October. The bank is also planning to raise Tier-1 capital before December this year.

The capital raising framework will be finalised at the bank’s annual general meeting on September 27.

The bank has completed Tier-2 capital raising for Rs 100 crore on August 25. The capital raising will be done through bonds.

“The bank needs more capital for implementing the revival plan which has been successful so far. We are hopeful of returning to profit trajectory in the second quarter of this financial year. For our systematic growth more capital is required,” said P G Jayakumar, Managing Director and CEO, Dhanlaxmi Bank.

Tier-2 capital is secondary bank capital that includes undisclosed reserves, general loss reserves, subordinated term debt, and more. Whereas Tier-1 capital is core capital, which includes equity capital and disclosed reserves.

Considering the present attrition rate of the bank the management is hopeful that the staff strength of the bank will be reduced to 2,700 from the existing 2,900.

“The banks, with the same size and business volume that of Dhanlaxmi Bank, have a staff strength of 2,500-2,600, in that context we have staff excess,” Jayakumar added.

As many as 1,300 employees have left the bank in a span of five months and the exodus still continues. The average age of the bank’s employees was 46 in 2008, now it stands at 30, he added.

Quashing the controversies regarding the possible acquisition of Dhanlaxmi Bank by major private sector banks, he added that people with “hidden political agenda” are behind such campaign.