Shares of Dhanlaxmi bank plummeted sharply on Tuesday after the All India Bank Officers Confederation (AIBOC), which is said to be representing 85% of the officers working in India?s banking industry, alleged manipulation in company?s accounts and provisioning. Stock fell as low as 24% in the intra-day trading to its 52-week low of 54.25 but came off lows following a clarification from the bank to close lower by 10% at R64.45 on Tuesday.
After opening in green the stock started to crumble on reports the Kerala state unit of AIBOC in a memorandum to the Reserve Bank of India (RBI) dated September 29 had alleged Dhanlaxmi Bank manipulated accounts and provisioning and has poor capital adequacy ratio and asset-liability mismatch. The AIBOC also claimed that the bank depended a lot on call money borrowing.
GD Nadaf, general secretary, AIBOC told FE that the bank?s profit has come down substantially, while expenditure is on the rise. ?Their June quarter profit was about R3 crore. They withdrew R12 crore worth of bonus, otherwise they would have reported a loss.? Nadaf said the RBI has acknowledged the letter sent to them by the union but hasn?t replied yet.
Dhanlaxmi Bank CFO Bipin Kabra denied all the allegations made against bank and said that these were survival tactics used by AIBOC. ?This is a fight for survival by a union which is only one of the four unions that represents the bank?s employees, as only 10% of their work force remains.?
?This is an illegal and unscrupulous tactics to defame the franchise of the bank. We strongly take exception to the strong-arm tactics by this association which has started an illegal agitation outside the bank headquarters? clarified the Dhanlaxmi bank.
On allegations made on the lender?s poor capital adequacy and asset quality, Kabra pointed out, ?Our capital adequacy is 10%. We have been growing so there is reduction in capital adequacy but it?s not alarming. It?s not as if the banks will collapse.?
?Our provision coverage ratio stands at 66%, which is a good number,? Kabra said.