Bad loans widens Dhanlaxmi Bank Oct-Dec loss to Rs 119 cr

PTI | New Delhi | Updated: Feb 10 2014, 23:38 IST

Kerala-based private lender Dhanlaxmi Bank saw its net loss widen to Rs 119.37 crore in the third quarter ended December, 2013-14, on account of rise in bad assets and higher provisioning for them.

Bank had reported net loss of Rs 117.64 crore during the October-December quarter of in 2012-13 fiscal.

Its total income for Q3, 2012-13 also declined to Rs 327.52 crore from Rs 352.11 crore in the year-ago period, it Dhanlaxmi said in a filing to the BSE.

The bank made provisioning for bad loans at Rs 111.76 crore during the third quarter, up from Rs 9.71 crore.

Gross bad loans or NPAs (non-performing assets) during the quarter rose to 7.05 per cent (Rs 546.32 crore) from 4.19 per cent (Rs 312.84 crore).

Net NPAs jumped to 4.64 per cent (Rs 350.22 crore) from 2.93 per cent (Rs 216.02 crore) in the year ago period.

Dhanlaxmi Bank scrip closed at Rs 34.30, down 0.44 per cent, on the BSE.

RBI pulls Dhanlaxmi Bank for rise in bad loans, appoints Manoranjan Dash as director on bank's board

MUMBAI: RBI has pulled up private sector lender Dhanlaxmi Bank for the rise in bad loans, and has appointedManoranjan Dash, who was the general manager of RBI Hyderabad, as an additional director on the bank's board. 

The Kerala-based bank, grappling with bad loans, has stepped up its recovery initiatives to get back on track. 

But this effort took a knock when the recovery head of Dhanlaxmi Bank sounded another warning, and in an email to employees, expressed concern over fresh slippages worth Rs 161 crore in the June quarter. 
"During the first quarter of the current financial year ended June 2013, the performance in recovery of NPAs as well as collection from Finnone Retail and Flexcube and corporate assets were disappointing with recovery reaching just 3% of the NPAs as on March 2013," said the recovery head. 

He added that fresh advances amounting to Rs 161 crore have slipped into NPA, terming the situation as "alarming". 

MD and CEO of the bank, PG Jayakumar, also expressed his worries. "The NPAs were mostly from the advances sanctioned during the previous 2-3 years. Some of the corporate advances sanctioned during the period turned into NPAs which resulted in the spike in the ratio to 4.82% (gross) and 3.36% (net)," he said. 

"In FY13, gross slippage to NPA was Rs 504.78 crore. But the bank could recover Rs 228.78 crore during the period, which was much higher than the outstanding figure at the beginning of the year," he added. 

Jayakumar, however, assured that the bank has a good recovery and monitoring mechanism supported by technology. 

Talking of Dash's appointment, he said that this was nothing new. "It may be noted that the appointment of Dash is not a new measure taken by RBI, but only as a replacement of Rohit Jain who was the RBI observer on the board. There has been representation of RBI on the board for quite a long time now," said Jayakumar. 

What have added to the bank's discomfiture are installments due for more than 90 days and fresh bad loans in the form of vehicle and construction equipment loans worth around Rs 34 crore. The employees have been instructed not to allow any account to drag payments till the quarter end. 

"As the borderline accounts will be normally having two EMI arrears, payments dragged up to the quarter end will have almost 5 EMI arrears, and it will be a difficult proposition for borrowers to pay off so much arrear together," he said.



Mortgage loans  inof Rs 27 crore,cluding construction finance/ loans Rs 15.26 crore, housing loans worth 3 crore and loan against properties amounting to Rs 8.74 crore have also led to the rise in bad loans. Gold loans worth 14 crore have already turned into NPAs. 

The lender's net non-performing assets had increased to 261 crore at the end March 2013 as against Rs 42 crore at the end of March 2010.

 Anita Bhoir, ET Bureau | 6 Aug, 2013, 04.00AM IST