According to the Bank Employees Union, Dhanalaxmi Bank’s business fell down from Rs22,000 crore but it is being camouflaged through inter-bank deposits and other measures
After the resignation of Dhanalaxmi Bank’s chief operating officer and managing director- Amitabh Chaturvedi due to serious issues with the management, a bank employees’ union has appealed for its merger with another public sector bank.
In a release, All India Bank Employees Association (AIBEA) stated that, “Dhanalaxmi Bank’s total business of around Rs22,000 crore has slipped down but the same is being camouflaged by inter bank deposits and other cosmetic measures. There are also reports the Bank may not show profit for this quarter. It is also learnt that sensing these developments, some of its customers have withdrawn their deposits and it is also reported that even Mr Chaturvedi who resigned as MD has withdrawn his family deposit of around Rs5 crore from the Bank.”
Sources say that the bank is facing liquidity problems and may report financial losses of about Rs30 crore. However, the lender is not in serious trouble, the sources added.
According to the AIBEA, the management’s decision to convert the lender into an ambitious and modern bank impacted its financial performance. The Union also accused the bank for appointing officials with huge remuneration unrelated to the capacity or performance of the bank.
Moneylife was the first one to report the bruising battle between Dhanlaxmi Bank and its union. The All-India Bank Officers Confederation (AIBOC) alleged that the bank has manipulated accounts and provisioning, has a mismatch in asset-liability resources, maintains poor capital adequacy ratio and has huge dependence on call money borrowing. It has also accused the bank for ignoring social banking and financial inclusion.
Last year in November, the Reserve Bank of India (RBI) conducted an inspection and issued a 15-point Monitorable Action Plan (MAP) to Dhanlaxmi Bank. This was followed by the furore caused due to a memorandum sent by the All India Bank Officers’ Confederation to the RBI stating the weak financials and certain wrongdoings by the bank.
As per the MAP, Dhanlaxmi Bank should moderate its loan growth, year-on-year, to 25% for 2011-12, should not be dependent on portfolio buyouts and should focus on increasing its direct advances. It has asked the bank to improve its earnings ratio and cash-income (efficiency) ratio to 70% by March 2012 from its current 83.73% during 2010-11. (Read more...RBI directs Dhanlaxmi Bank to adhere to its action plan)
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