Dhanlaxmi Bank stocks down by 10%; CFO denies solvency problems

Amid allegations of manipulated accounts and provisioning hurled at it by the All Indian Bank Officers Confederation (AIBOC), the shares of Dhanlaxmi Bank fell as much as 24 percent on Tuesday. But, after it denied the charges, its stocks recovered to end at 64.45 - 9.99 percent down from Monday’s close.

Dhanlaxmi Bank had earier dismissed the allegations saying that all the bank’s numbers are “audited and inspected by the Reserve Bank of India”, even as the stock tumbled 22 percent as news of the development spread. The stock later recovered slightly and is currently about 15 percent lower at Rs 61.

The AIBOC’s allegations have been detailed in a report on the website of Moneylife magazine.

Speaking to CNBC TV 18, Bipin Kabra, chief financial officer of Dhanlaxmi bank, emphasised there was “no problem with the solvency of the bank”.

He said contrary to the fears raised by the AIBOC in its memorandum sent to the RBI, the bank’s capital adequacy ratio was around 10 percent and that over the past four to five quarters, the bank’s delinquency levels had been declining, So there are no concerns over stressed assets, he added.

Earlier, AIBOC General Secretary GD Nadaf told CNBC TV18 that he was worried about public money invested in Dhanlaxmi Bank.

The Moneylife report said the confederation had alerted the Reserve Bank of India regarding Dhanlaxmi Bank’s manipulation of accounts and asset provisioning, a mismatch in asset-liability resources, poor capital adequacy ratio and huge dependence on call money borrowings.

According to the report, the confederation had also asked the central bank to merge Dhanlaxmi Bank with any public sector bank to safeguard the interests of employees and customers of the bank.

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