Kerala-based private sector lender Dhanlaxmi Bank on Wednesday came out with clarifications on the allegations of financial irregularities made against it by employee union All India Bank Officers’ Confederation (AIBOC).

The bank rebutted all the allegations made by the union and termed them ‘factually incorrect’. Amitabh Chaturvedi, MD & CEO, Dhanlaxmi Bank, said the bank has complied with all the rules laid down by the Reserve Bank of India(RBI). ?We continue to interact with the RBI on a regular basis and there is no concern on compliance or the asset quality front,? he said.

Of the 4,800 employees of the bank, about 1,300 are associated to unions. The bank has a total of four unions, of which the management claims three are ‘behind’ it, while the one affiliated to AIBOC, it says is trying to create a disturbance.

Chaturvedi said, ?They feel they are disturbing the bank but it could disturb the industry which operates on trust. Even a bank with a strong balance sheet can be shaken but fortunately there have been no unusual withdrawals.?

Shares of the lender closed 2.5% higher at R66 on Wednesday on the Bombay Stock Exchange (BSE). The stock had dropped 10% to R64.5, its lowest level in more than two years, on Tuesday after AIBOC raised questions about the lender’s financial health.

On the allegation that the bank was a big borrower in the call market, Bipin Kabra, CFO, Dhanlaxmi Bank said the bank borrows about R300 crore from the call market daily as against a limit of R1,000 crore. ?We are dependent on call money as are many other banks and there is no harm in it,? said Kabra.

Moreover, he said an asset-liability mismatch was ?an inherent characteristic of the banking business? and added that the bank was complying with the limit prescribed internally as well as that laid down by the RBI. On allegations that the bank?s asset quality was poor, Kabra said non-performing assets (NPAs) have been coming down in the last two quarters and are currently lowest in the banking industry.

Kabra pointed out that the as on June 2011, the bank had a comfortable capital adequacy ratio (CAR) ratio of 11.4% and enough room to raise tier II capital. ?If the current market doesn’t allow us to issue shares, we can always raise up to R500 crore in the form of tier II capital,? he said.