AIBOC raises allegations over Dhanlaxmi Bank
Srujani Panda / 11 Oct 2011
Dhanlaxmi bank's scrip nosedived as All India Bank Officers Confederation (AIBOC) has raised a red flag on the operations of the bank and has alerted the Reserve bank of India (RBI) regarding banks misconduct.
The scrip today made an intraday and 52 week low of Rs 54.25, down 24%. The scrip has recovered from its day’s low and is currently trading at Rs 59.30, down 17%. There was a huge spike in volume. as well Total traded quantity on BSE was 80.45 lakh versus two week average quantity of 0.54 lakh.
According to AIBOC, the bank has manipulated its accounts and provisioning norms. It also stated that the bank maintains poor capital adequacy ratio, has a mismatch in its Assets and Liability, and has more dependence on Call money borrowings. The bank has used misappropriate methods and shown profits in the last one year.
It also has no control over its expenditure like salary paid to executives, telephone, rent, ATM expenses etc. The Memorandum also said that the bank was avoiding priority sector lending.
AIBOC’s Kerala Committee has appealed to RBI, to investigate the bank's affairs and has asked it to merge it with any other public sector bank to safeguard the interest of its employees and customers.
In response the bank's management denied the allegations and termed them as baseless, and said some people are trying to spoil the bank's image. According to the management, the bank is well regulated by RBI and the growth is monitored periodically.
The following table shows the comparison of company’s performance for the first quarter of FY12. Net NPA’s has come down from 0.76 to 0.23 on YoY basis. Capital Adequacy and CASA are well maintained by the bank and does not show large fluctuations. While there are concerns for the banks when we look at Net Profit which declined by 44% to Rs 3.4 crore and the NIM which declined by 60 basis points to two% on account of rising Interest rate. Therefore, one must adopt a wait and watch approach towards the scrip and should take decisions after the Q2FY12 numbers.
Financial Performance
The scrip today made an intraday and 52 week low of Rs 54.25, down 24%. The scrip has recovered from its day’s low and is currently trading at Rs 59.30, down 17%. There was a huge spike in volume. as well Total traded quantity on BSE was 80.45 lakh versus two week average quantity of 0.54 lakh.
According to AIBOC, the bank has manipulated its accounts and provisioning norms. It also stated that the bank maintains poor capital adequacy ratio, has a mismatch in its Assets and Liability, and has more dependence on Call money borrowings. The bank has used misappropriate methods and shown profits in the last one year.
It also has no control over its expenditure like salary paid to executives, telephone, rent, ATM expenses etc. The Memorandum also said that the bank was avoiding priority sector lending.
AIBOC’s Kerala Committee has appealed to RBI, to investigate the bank's affairs and has asked it to merge it with any other public sector bank to safeguard the interest of its employees and customers.
In response the bank's management denied the allegations and termed them as baseless, and said some people are trying to spoil the bank's image. According to the management, the bank is well regulated by RBI and the growth is monitored periodically.
The following table shows the comparison of company’s performance for the first quarter of FY12. Net NPA’s has come down from 0.76 to 0.23 on YoY basis. Capital Adequacy and CASA are well maintained by the bank and does not show large fluctuations. While there are concerns for the banks when we look at Net Profit which declined by 44% to Rs 3.4 crore and the NIM which declined by 60 basis points to two% on account of rising Interest rate. Therefore, one must adopt a wait and watch approach towards the scrip and should take decisions after the Q2FY12 numbers.
Financial Performance
| Particulars | Q1FY12 | Q1FY11 |
| Net Profit (Rs /Cr) | 3.4 | 6 |
| NIM (%) | 2 | 2.6 |
| Net NPA | 0.23 | 0.76 |
| CAR (%) | 11.4 | 11.01 |
| CASA | 22.2 | 21.4 |
| ROA | 0.09 | 0.28 |