Dhanlaxmi Bank clarifies its position
Srujani Panda / 12 Oct 2011
Today, the management arranged a press conference to clarify all the doubts which were raised about the bank, which shows a sense of confidence that the management has in the business.
Yesterday, Dhanlaxmi Bank tanked on the allegations which were made by All India Bank Officers’ Confederation (AIBOC). It made an intraday and 52-week low of Rs 54.25, down by 24 per cent. However, it recovered from the day’s low and closed at Rs 64.45. Today, the stock is up two per cent and is trading at Rs 65.80.
The following table shows the allegations made against Dhanalaxmi Bank and the facts, as clarified by the management:
| Particulars (Rs / Cr) | Allegation | Management's Clarification |
| Inter Bank deposit | 1600 | 1077 |
| Certificate of Deposit | 2500 | 1200 |
| Other special rate deposit | 5000 | 4000 |
| Call Money borrowings (per day) | 300 | Under the RBI's limit of Rs 1000 |
| Current deposit | 790 | 1536 |
| Asset Liability Management | Mismatch | Within the prescribed limits of RBI |
| Advance growth | 900 | 600 |
| Buy out Advances | 550 | 166 |
| Asset Quality | Deteriorating | Net NPA's as on June11 was 0.23 versus 0.30 as on March 11 |
| CAR | 9% | 11.40% |
| Priority Sector Lending | Avoiding | For FY11, Loan contributed 51 5versus RBI regulation of 40% |
| Salary structure | No uniform Salary structure | Remuneration is on Cost to Company basis (C to C) |
Other issues, which include deferring expenses like executives’ salaries, telephone bill, rent, ATM expenses etc., were denied by the management, which said that all expenses were paid in a timely manner. Of the total 4780 employees in the bank, 1298 employees are under the trade union category, and of these, only 400 employees are under AIBOC.
The accounts have been audited twice, which should also give a strong felling that the bank is in good shape. It is functioning well under the guidance of RBI and in the interest of shareholders.
The management has clearly denied all the allegations, terming them as baseless. The bank is well regulated by RBI, and said that the growth is monitored periodically. The Q2 FY12 results are imminent, and investors would do well to wait for the results to be declared and can then decide whether or not to enter into the scrip.
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