RBI denies new Branch Licenses to Dhanalakshmi Bank due to Low Capital Adequacy

The Reserve Bank of India (RBI) has withheld permission for fresh branch licenses to Dhanalakshmi Bank because it has less than the required net worth. The bank had applied for licenses for 25 to 30 branches in 2007-08.

The minimum networth required by the bank is Rs. 300 crore. As on June 30, 2007, the bank’s net worth stood at Rs 130.23 crore.

RBI also wants the largest shareholder, P Raja Mohan Rao, to reduce his stake to 10 per cent.

Currently, the bank has a network of 181 branches and 26 extension counters across Kerala, Tamil Nadu, Karnataka, Andhra Pradesh, Maharashtra, Gujarat, Delhi and West Bengal.

The bank had deposits of Rs 3,194 crore and loan portfolio of Rs 1,922 crore at the end of June 2007. It reported 100 per cent increase in net profit to Rs 6.05 crore in the quarter ended June 30, 2007, compared to the same period a year earlier.

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