Kerala-headquartered Dhanlaxmi Bank on Monday said it does not plan to shut down branches or shrink operations, but has initiated steps, including salary cuts and surrender of excess real estate in metros and major cities, to control costs as it grapples with pressured margins.
“We don’t have any plans to shut down branches to reduce cost,” said PG Jayakumar, chief executive officer and managing director, Dhanlaxmi Bank. “We have already initiated steps for cost control such as salary reduction, cutting excess flab and surrendering excess real estate in metros and other cities.”
The private sector bank was in the news recently owing to the tussle between the union and the management even as it faced liquidity pressure in the wake of rapid expansion activities undertaken. Last year managing director Amitabh Chaturvedi resigned from the bank over differences with the management.
Salaries have been cut up to 40% and the bank intends to bring down cost to income ratio to around 90% in the current fiscal year from the current 140%.
Around 300 employees have quit since November 2011.
“Most of the people had quit voluntarily in this period,” said Jayakumar.
The bank also plans to increase the share of retail business to 50% in the current fiscal against the current 40%.
Jayakumar also said that the bank, which reported a net loss of Rs 37 crore in the quarter ended December 2011, is likely to turn profitable in the current financial year. “We plan to grow our gold loan business to 20-25 % in this fiscal from the current 8%.”