Dhanlaxmi Bank Officers Organisation has urged the RBI to conduct an enquiry and book the bank’s management for cheating the shareholders and public with false growth stories while its losses continue to widen

Dhanlaxmi Bank has posted operating loss of Rs76.71 crore for the quarter ending March 2012, an increase of 110% as compared to a quarter earlier. While the results are clear indication of the poor strength of the bank, there has been no action from the regulator, the Reserve Bank of India (RBI). The bank’s union which has been raising the alarm from long time has demanded an enquiry by the RBI.

Dhanlaxmi Bank Officers Organisation (DBOO) in its recent circular said that, “DBOO has written a letter to RBI requesting it to conduct an enquiry and book the culprits. It is a mystery as to why the regulator is silent, when the bank’s management which cheated the shareholders and public alike with false growth stories and indulged in reckless spending, has escaped while the institution recorded a loss of Rs115.63 crore.”

The Thrissur-based private sector lender posted a net loss of Rs86.51 for the March 2012 quarter as compared Rs36.87 a quarter earlier. The bank has posted net loss and operation loss for two consecutive quarters of 2011-12. The non-performing assets (net) for the reporting quarter rose to Rs58 crore from Rs33.82 crore a quarter earlier.

A DBOO member told Moneylife on condition on anonymity that, “The bank has adopted measures like salary cut, abolishing certain allowances, etc. However, the employee cost of the bank is still high compared to other banks. There is an urgent requirement of investigation by the RBI.”

According to DBOO circular “there are at least 50 CTC officers in the higher scale with a package of more than Rs2 lakh per month. There are a few officers, mainly in Delhi Region, for whom the salary cut has not been affected at all.”

In February this year, managing director and chief executive, Amitabh Chaturvedi resigned from the bank following serious differences with some of the board members. He was replaced with PG Jayakumar.

Moneylife was the first one to report the All-India Bank Officers Confederation’s (AIBOC) allegations 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.
 
Subsequently, last year in November, the RBI conducted an inspection and issued a 15-point Monitorable Action Plan (MAP) to Dhanlaxmi 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 earning ratio and cash-income (efficiency) ratio to 70% by March 2012 from its current 83.73% during 2010-11. (http://www.moneylife.in/article/8/21178.html)