Companies & Sectors
The stink coming from Dhanlaxmi Bank: AIBOC raises serious allegations

In a memorandum to the RBI, AIBOC has raised several questions over Dhanlaxmi Bank’s business operations

After whistleblowers raised a red flag raising questions about the operations of Dhanlaxmi Bank, the All-India Bank Officers Confederation (AIBOC) has alerted the Reserve Bank of India (RBI) regarding the bank’s wrongdoing. Specifically, it has 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.
AIBOC’s Kerala committee, through a memorandum sent to the RBI, has appealed to the apex bank and the finance ministry, to initiate investigations against the bank management and asked it to merge it with any public sector bank to safeguard the interest of employees and the customers of the bank.

Speaking about the obvious mismatch in the asset-liability, it is stated in the memorandum that, “The Bank’s liquidity position is potentially dangerous with the enormous proportion of Inter Bank deposit in its deposit mix. Out of the Rs13,000 crore  of  deposits (that) the  Bank  has,  around  70% are  purchased funds, i.e., Inter  Bank deposits (Rs1,600 crore), Certificate of Deposits (Rs2,500) crore and other ‘special-rate’ quoted deposits (at) Rs5,000 crore.”

According to the memorandum, the bank is heavily dependent on call money borrowing. “The average call money borrowing in the last one year is Rs300 crore per day. In fact, the Bank is borrowing from the call money market heavily since the last two years and is lending it with a margin in violation of the guidelines of the Reserve Bank of India.”

AIBOC says in the memorandum that the bank’s growth has be stunted with 50% fall in current deposits, from Rs1,500 crore to Rs790 crore, and sharp decline in its profit to Rs3 crore in the first quarter of 2011 from Rs55 crore in 2009. It also says, “Advances grew by 10% (Rs900 crore), but out of this, Rs550 crore are not retail loans, but “buyouts”.

The memorandum has cautioned the RBI about non-performing assets (NPAs) turning into bad debts, which would severely affect the bank. “The Bank’s capital adequacy ratio at present is touching 9%, and this can come down at any moment, in case a big loan turns (into an) NPA. The asset portfolio of the Bank is also equally daunting with more than 20% constituted by ‘buyouts’ and another 40% by corporate advances. The composition and health of these loans are not individually scrutinized and therefore have  grave risk (of) further mounting of NPAs once these loans turn into bad debts for which there is every possibility.”  

It further states that the bank has manipulated accounts and various provisions. “The  available information is that the Bank adopted a lot of unscrupulous methods to show  at least a nominal profit in the last one year. Deferring expenses like salary paid to  executives, telephone, rent, ATM expenses, capitalizing revenue expenses like salary  paid to staff etc are frequently practiced by the Bank.”  

According to the AIBOC’s memorandum to the apex bank, Dhanlaxmi Bank recruited many new officers without uniform salary structure. “There is no policy for fixing remuneration of C to C employees. It depends on the relative bargaining strength of the new recruits. There is no transparency on the “performance linked bonus” or “joining bonus”, or “committed bonus” paid to C to C employees.”  

AIBOC’s Kerala unit says, “The organizational structure has been revised umpteen times in the last 30 months. New “verticals” have come up but not stabilized because  of the frequent  changes. Some functions are duplicated, others neglected.”

The memorandum said that the bank has been avoiding granting loans to the priority sector such as small agricultural loans, educational loans, etc.  

In fact, according to sources close to the development, AIBOC’s Kerala State Committee is holding a dharna in front of the regional office of the RBI in Thiruvananthapuram on this contentious issue.

Incidentally, according to AIBOC, there was detailed inspection by the RBI on Dhanlaxmi Bank. The apex bank, after coming out with “detailed inspection in Dhanlaxmi Bank, has come out with alarming facts about all the above and has asked the Bank to provide more than Rs100 crore towards the unaccounted expenses and  provisions by debiting the net worth of the Bank.”

Dhanlaxmi Bank has refused to comment on the issue. It said that, “Like all banks, we are also regulated by the RBI and the growth is monitored by the regulator periodically. The baseless allegations are being spread by some people who are trying to spoil the image of the bank.”



dheenadhayalan rti activist

5 years ago

the accounting procedures in the banks are malefide. the banks can publish any Annual reports claiming profits. dhanalakshmi bank is no exception. the financial sector is managed by 3 institutions ( fin.min, RBI & Banks) having conflict of interest in each others working and always work in connivance.
through RTI the susceptibility of the system is proved by me in the RBI But even the media do not have the guts to take on the banks.


5 years ago

i am an uncompromised intelligence reporter of the dhanalakshmi bank since 1976 exposed corrutpion


5 years ago

i am highlighting malpractices of various officials belongs to various branches being a confidential intelligence officer of the bank appointed by chairman Mr N.S.Mahadevan since 1976 i am discharging my duties and highlighting wrong doings kastky filed cases in trichur courts and high court of kerala against the bank and contested for administrative panel for AGM DEMANDING TO DEBATE THE ISSUES AND TO IDENTIFY THE PERPETRATORS AND BRING THEM TO JUSTICE WHICH THE BANK SUPPRESS AND SUBMITTED IRRESPONSIBLE STATEMENTS TO TORPEDO JUSTICE HAVE NO RESPECT OVER THE JUDICIAL OFFICERS OR CBI POLICE AND WANTS TO SUPPRESS WRONG DOINGS AT THE COST OF INDIAN ECONOMY


dheenadhayalan rti activist

In Reply to TSRAJAMANY 5 years ago

you are one of the rarest of rare citizen having fair doubts about the honesty of the PSU banks. it is amazing to know that you are fighting it out for over 36 years.


6 years ago

you should check bulk share deals in the last 12 months. Should be an eye opener


6 years ago

hey guys! relax. the bank will be announcing results on 20th. why don't you chill till then? let the results speak for themselves.


sameer jn

In Reply to Ashish 6 years ago

Actually that would be foolish. If one reads the bank union's letter, they talk about massive window dressing. Investors depending on dressed up results will really catch a major CHILL!!!!!!!!

Kunal Sehgal

6 years ago

I am aware of Ms. Dalal's long-standing reputation as a responsible financial journalist. That's precisely why I am anguished at the way she's insinuating that Dhanlaxmi Bank is going the Global Trust Bank way. GTB happened a decade ago! Back.then, RBI's systems of surveillance were far less stringent. To suggest that RBI is knowingly turning a blind eye to Dhanlaxmi Bank's alleged excesses is unfair. I believe the Dhanlaxmi is set to declare its quarterly results next week. Will MoneyLife be prepared to publish a corrigendum if its allegations are proved to be incorrect?



In Reply to Kunal Sehgal 6 years ago

Mr Sehgal, dont you think you should be addressing these comments to Dhanalakshmi Bank and its Communications Department?

The management does not want to meet us. That usually happens when they have something to hide. As we have repeatedly pointed out, they did not answer any specific question and resorted to the most ludicrous evasive responses. Are you a shareholder? If you are anguished in your capacity as an investor, I would strongly advocate that you question the management and ask them why they failed to respond to our questions for over two weeks. Even before publication we wrote to them ONCE again asking if they wanted to change their mind and answer questions. They said NO.
So where is the question of a corrigendum? Do you have some facts that are not in the public domain? If yes, let them be provided to all investors. Otherwise, I am afraid you sound like the voice of management.


6 years ago

Corruption, fraud, deceit, fudging and many more actions have reached monumental proportions. The cause appears to be monumental neglect of Government, Governance, Regulations, Oversight functions, Responsible Civil Society, Apathy of people, Extended honey moon period of the joy of freedom, Blissfully ignoring the cancerous role of hijacking of institutional mechanisms by elected representatives, Use of corruption as spring board by Elected Politicians, Institutionalization of the attitude that corruption in society or nation is like DNA to Human race without which there can be no human, (broadly under one phrase “Checks and balances”) and so on and so forth since 1947. Now the solace for political parties as well as people (Voters) is that any way corruption (covers a large number ranging from day to day bribes to fly by night business shops to mega companies to mega schemes to mega scams to balance sheets fudging to harassment of employees {Senior Colleague-Junior Colleague kind} in offices, organizations, adulteration, duplicate business ( ---the list is very long) has become incurable cancer and it is impossible to get out of it and hence it will be useless to support any one on this issue. If at all anybody supports this he would be an idiot and indulging in doing anything about it is madness. So the net result is Human race has two substances that separate life from death that is corruption and life material (so far it has not been discovered) which means Human is dead without corruption.

Sucheta Dalal

6 years ago

We notice that comments like those of Nishant Menon seem to be the voice of the management. Please read our story about how much time was given to management to responde
In fact, our report stuck to only those issues raised by the Officers Union - while we had posed several more queries to management.
The bank's response was to arrogantly refuse to answer and to subtly threaten us.
They were given more than two weeks of time and before publication, we wrote to the bank once again to ask if they wanted to change their mind.
It is disgusting that listed companies should react only when the stock price has fallen and the story is picked up by mainstream media.
That is fine by us, but to post comments to discredit our writing is not acceptable.
As for the RBI - even in the Corporation Bank case we repeatedly asked them about charges against the Chairman. The RBI did nothing. Finally it was the CVC that initiated action.
So we wouldn't read too much into the RBI's silence.
Remember they were silent and in fact supportive of Global Trust Bank despite its openly known shenanigans with Ketan Parekh, right until the day it collapsed. And this was under a powerful RBI Governor!

Suchet a



In Reply to Sucheta Dalal 6 years ago

I fully agree with sucheta maam. Rbi has not been the watchdog that it is expected to be. It was RBIs failure that allowed harshad mehta to misuse the bankers receipts and commit a massive fraud. NO one from RBI was ever held accountable for the same. AIBOC or any other officersor employees union would not make such grave charges without some basis . The bank is within its rights to decline to answer moneylife but it does not mean that everything is above board in its functioning.


6 years ago

Certain sections of the media have recently reported financial irregularities at Dhanlaxmi Bank, citing statements from one of the Bank’s employee associations.
Dhanlaxmi Bank today reiterated that all such allegations are baseless and represent a motivated attempt by one of the employee associations de-recognized by the Bank.
The association has accused that the Bank has borrowed high cost funds in the form of Certificate of Deposits of about Rs 2,500 crore, whereas the fact is: The Bank has a limit of raising Rs 1,500 crore through Certificate of Deposits. There are multiple examples of such falsification of accounts by the association.
The Indian banking system in general and the private sector banks in particular, including Dhanlaxmi Bank, are subject to healthy supervision in the form of regulations from the Reserve Bank of India. In fact, the apex bank in May 2011 conducted and completed the Annual Financial Inspection of the Bank's overall performance.
Moreover, the central bank only last week also granted the Bank's MD & CEO, Mr Amitabh Chaturvedi, a second term of three years. The re-appointment is an affirmation of the fact that the audits and inspection into the Bank's books have found nothing amiss.
In the past three years, the Bank has witnessed excellent growth and healthy financials with deposits growing from Rs 3,608 crore in FY08 to Rs 12,530 crore in FY11 (247% growth) and loans from Rs. 2,102 crore to Rs. 9,065 crore (over 330% growth). This performance bears testimony to the support and the confidence the Bank enjoys from its customers, regulators and other stakeholders.
It is pertinent to mention that the number of employees in the said association is minuscule and is currently less than 10 % of the bank’s workforce. The campaign therefore seems to be the handiwork of some misguided employees and some rank outsiders who have no stake in the well-being of the institution.
This is an illegal and unscrupulous tactics to defame the franchise of the bank.

Boodugere Nagaraj

6 years ago

Why Management version is not published ? We watched the Chairman of the Bank giving replies to the commentators on CNBC this morning, and it was convincing. I also wonder why these anomolies have not been pointed out by Statutory Auditors and RBI Inspectors who conduct periodical inspections ? Should it come as a surprise to RBI or Govt ? Then RBI should be taken to task. If the allegations raised by the Bank Officers Union is false, then RBI should initiate criminal action against Union Office bearers, for their attempt to shake the investors confidence in Banking institutions.


6 years ago

People are too keen to notice that some establishment is on a collapse. The bank has been in the industry for the last 84 years, but the last four years have witnessed the real impact of a good management. The re branding, placement of the bank as a new gen tech based bank with its 84 years of heritage unstolen. This has created head aches for many including the competitors, some employees who were forced to do their works properly etc.

I think these kind of allegations are not to be given any kind of attention/importance. I believe there are some bad, crooked intentions behind the same. Dhanlaxmi Bank is being regulated by RBI, and so is the industry as a whole.


6 years ago

Kudos for the expose which was going on for some time in the Dhanalakshmi Bank. But don't expect RBI will do anything. It will enter only when the Bank fails like the famous Hindi film policeman. The case of former CMD of Corporation Bank is a pointer. After the CVC Direct Inquiry, RBI sent its inspection team. It reeled out special reports, but no action. And the CMD happily retired scot-free in the last month. Long live RBI!!

T R Bhat

6 years ago

The memorandum to RBI should open the eyes of the regulator and the Ministry of Finance. They should take stern, corrective action immediately in the interest of the banking public,employees and other stake holders. But will they act or will they bolt the stable after the horse flees (as it happened in the case of Nedungadi Bank in Kerala)?


6 years ago

Difficult times-need to exercise great caution while placing deposits.Thanks,ML,for such informative articles.

Bhaskar jain

6 years ago

Thanks for the article.. That is why they were offering high rates for FD.. When other banks are offering sub 9%, they offer 10+%

Custody of Speak Asia financial advisor extended up to 12th October

In 2002 Sanjeev Dandona was charge-sheeted by the CBI along with seven other people, including three officials from the Transport Department of Delhi Government, for allegedly issuing forged permits for new auto-rickshaws

A local court in Mumbai has extended the custody of Speak Asia’s financial consultant, Sanjeev Dandona and the web designer, Nayan Khandor, who was responsible for designing e-surveys, till 12th October.

An official from the Economic Offence Wings (EOW), who preferred anonymity, told Moneylife, “Their custody has been extended till 12th October.”  

Mr Dandona was arrested by the EOW on 29th September, after it was learnt that he was the proxy owner of Kritanj Management & Allied Services and is linked with Speak Asia. Kritanj Management is the master distributor of Singapore-based Haren Ventures Pte Ltd (HVP) for e-zines in India. Mr Dandona is also alleged to be advising HVP and Tulsient Tech Pvt Ltd and also transferring funds collected by Speak Asia agents to Singapore.

Just the day after the arrest of Mr Dandona, it was revealed that the online surveys, which Speak Asia used to claim (and its agents used to believe), were actually created not in Singapore, but in Mumbai. This was revealed following a confession from Nayan Khandor, a Web designer and director of Dadar (central Mumbai)-based Brand Salon, that his firm was active in creating the online surveys for Speak Asia.

According to an investigation officer, Mr Khandor confessed that he was given the task of creating online surveys and designing the e-magazine by Speak Asia's chief executive Manoj Kumar Sharma and has been involved in this job since February 2010. The material seized from Mr Khandor’s office also indicates his close relation with Speak Asia. He was arrested on 30th September.

When asked about the investigations, the official added, “They are being examined on various counts. Dandona has given some leads relating to the top bosses such as Manoj Kumar and Haren Kaur of Speak Asia. Nayan was just responsible for the designs, so not much has been revealed from him.”

Moneylife had reported earlier that Mr Dandona has confessed that Speak Asia was running a Ponzi scheme.

Earlier in 2002, Mr Dandona was charge-sheeted by the CBI (Central Bureau of Investigation) along with seven other people, including three officials from the Transport Department of Delhi Government for allegedly issuing forged permits for new auto-rickshaws. Last year in May, Justice Vipin Gandhi of the Delhi High Court dismissed Mr Dandona’s petition saying, "Prima facie, his involvement appears to be deep-rooted. It cannot be said that on the basis of the allegations contained in the charge-sheet the petitioner WP (Crl.) 586/2010 Page 15 of 16 may not have been involved in the criminal acts attributed to him. Consequently, I see no merit in this petition and dismiss the same.”




6 years ago

Looks like from hiding place. But clearly not a hidden camera video as mentioned.


6 years ago

Where is this Parag? I dare him to prove his accusation against EOW


6 years ago

Where is Parag?. disappeared?

He should come out with the facts regarding the alleged corruption.


6 years ago

It is a serious allegation made by Parag. He says EOW was bribed. Parag must be immediately summoned by the Vigilance.


6 years ago

Why are u roaming behind...speakasia....there law which punish speakasia if it ponzi scheme..........why r u worrying Mrs.dalal................................



In Reply to Goutam 6 years ago

Sucheta Dalal & a authority named EOW are bribed with too much money to defame Saol......But, out of utter dismay....These ppl don't have anything against Saol....Try your best Moneylife won't succeed with your wrong intentions....Ab to lene ke dene padenge...Soon you will receive a lawsuit of few 100 crores by Speakasia for defaming them...Now it is your turn to runn away & that too for real!! Bhagwaan aapko sadhbuddhi dee....varna kahi yeh "vinaash kaale, vipreet buddhi waali" kahavat kahi satya na hoo jaye....Best of Luck!!

Krishna Menon

In Reply to Parag 6 years ago


Shri. Parag

You are requested to substantiate your allegation that the EOW was bribed. Are you in India or abroad?


In Reply to Parag 6 years ago

ok. very good. who will bear the expenses, including court fee? unemployed, poor , begging Panelists? !! HAhahaa


In Reply to Parag 6 years ago

You have made a very serious allegation against EOW. Are you aware of its consequences?

Rally may extend: Monday Closing Report

Nifty may move in the range of 5,030 and 5,135

Across-the-board buying by institutional investors and hopes of an end to the euro-zone debt crisis led the market higher for the second day in a row. Last week, we had mentioned that the trend is on the positive side; the index is now in the zone where we may see a move up to 5,000-5,100. Today the Nifty crossed the level of 4,955, which is its 20-day moving average, indicating further gains on the cards. The Nifty’s past two days’ gains has wiped off the losses of the three trading days ending 5 October 2011. From here, we may see the Nifty moving in the range of 5,030 and 5,135.    

The domestic market opened flat ahead of the corporate earnings season, which kicks off this week. Negative sentiments in the global markets also weighed on investors. The Nifty opened down one point at 4,887 while the Sensex rose 37 points to resume trade at 16,270. The benchmarks fell to their day’s lows in initial trade with the Nifty falling to 4,882, and the Sensex slipping to 16,231.

However, across-the-board buying by institutional investors in subsequent trade resulted in all sectoral indices trading higher. The indices pared some of the gains in noon trade but the green opening of the key European indices after assurance from French and German leaders that they would come up with a new plan by the end of the month to ease the region’s debt crisis helped the domestic market edge higher in post-noon trade. The market hit the intraday high in the closing minutes of the session wherein the Nifty touched 4,991 and the Sensex 16,596. The indices closed near those levels with the Nifty gaining 92 points at 4,980 and the Sensex settling at 16,557, a jump of 325 points over its previous close. The NSE (National Stock Exchange) saw a volume of 54.73 crore shares.

The advance-decline ratio on the NSE was 1092:545.

While the broader indices also ended in the positive, they lagged behind the Sensex today. The BSE Mid-cap index gained 1.36% and the BSE Small-cap index rose 0.97%.

Barring the BSE Healthcare (down 0.06%), all other sectoral indices settled higher. The gainers were led by BSE Realty (up 3.22%), BSE IT (up 2.85%), BSE Consumer Durables (up 2.78%), BSE Oil & Gas (up 2.72%) and BSE TECk (up 2.66%).

The top Sensex gainers were Tata Motors (up 7.40%), Tata Power (up 5.44%), DLF (up 4.74%), Wipro (up 4.42%) and Sterlite Industries (up 3.48%). The top losers were Maruti Suzuki (down 3.58%), Sun Pharma (down 1.38%), Jindal Steel (down 1.37%), Cipla (down 0.82%) and Larsen & Toubro (down 0.51%).

The major gainers on the Nifty were Tata Motors (up 6.47%), Sesa Goa (up 5.51%), Tata Power (up 5.29%), DLF (up 4.84%) and IDFC (up 4.81%). Maruti Suzuki (down 3.79%), Jindal Steel (down 1.70%), Sun Pharma (down 1.30%), Cipla (down 0.98%) and Siemens (down 0.70%) settled at the bottom of the index.

Most markets in Asia closed higher on optimism that a solution to end the debt crisis in Europe is being drawn up. However, stocks in China closed at their lowest since March 2009, after local media reported a fall in property sales volumes during the Golden Week holiday last week, seen as a boom time for realty sales.

The Hang Seng added 0.02%; the Jakarta Composite gained 0.74%; the Straits Times climbed 1.06% and the Seoul Composite rose 0.38%. On the other hand, the Shanghai Composite fell 0.61% and the KLSE Composite lost 0.21%. Markets in Japan and Taiwan were closed for a local holiday.

Back home, institutional investors—foreign and domestic—were net buyers in the equities segment on Friday. Foreign institutional investors infused Rs491.55 crore into stocks and domestic institutional investors pumped in Rs19.41 crore.

Global consultancy and IT services provider Mahindra Satyam (Satyam Computer Services) has partnered with iPipeline, a specialist in providing innovative marketing, selling and processing solutions to the banking, financial services and insurance and markets. As a part of the partnership Mahindra Satyam will position iPipelines customer relationship management (CRM) tools for financial services to banking and financial services clients in West Asia, besides the Asia-Pacific and India markets. Satyam gained 3.85% to close at Rs70.15 on the NSE.

Jindal Power (JPL), a subsidiary of Jindal Steel & Power, has sought a no objection certificate (NOC) from the coal ministry for the proposed expansion of its thermal power plant in Chhattisgarh at an estimated cost of Rs13,410 crore. The company has sought the NOC as the existing plant at Tamnar, in Chhattisgarh, is situated over a coal-bearing area having reserves of about 50 million tonnes. Jindal Steel & Power lost 1.70% to settle at Rs475 on the NSE.

Onco Therapies, a wholly-owned subsidiary of Strides Arcolab, has received US Food and Drug Administration (USFDA) approval for Cladribine Injection 1mg/ml packaged in 10mg/ml single dose vials. The US market for generic Cladribine is about $5.3 million with only one major player.
Cladribine is a part of the oncology portfolio licensed to Pfizer in January 2010 for the US market. The product is expected to be launched shortly. Strides settled at Rs343.60 on the NSE, up 0.38% higher.


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