Dhanlaxmi Bank denies all the allegations made by the All India Bank Officers Confederation, which had raised several questions over its business operations, first reported by Moneylife. But the market is not convinced by the bank’s denial

The share price of Dhanlaxmi Bank tanked by more than 20%, touching its 52-week low of Rs54.40, during today's trading session after Moneylife reported on the memorandum sent by the All India Bank Officers Confederation (AIBOC) to the Reserve Bank of India (RBI) regarding the bank's wrongdoing and specifically, alleging that the bank had manipulated accounts and provisioning. (See: The stink coming from Dhanlaxmi Bank: AIBOC raises serious allegations).

Moneylife contacted the bank twice for its specific reaction on the various allegations, well in advance before the article went to press. First, the bank was contacted when the information was sought from the whistleblowers, and later, when the memorandum was sent by the AIBOC's Kerala State Committee to the apex bank.

However, Dhanlaxmi Bank refused to give any comment and said, "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."

Interestingly, after Moneylife published the story, the bank has given its official version to news channels, where it denied all the allegations made by the union.

Bipin Kabra, Chief Financial Officer (CFO), Dhanlaxmi Bank, was quoted in CNBC saying, "All (these) allegations are baseless.

"The union is getting marginalised every year. Currently, less than 10% workers are in AIBOC. Our current capital adequacy is at around 10%. We see non-performing assets (NPAs) dropping every quarter," he added.

Mr Kabra was quoted in NDTV Profit as saying, "Our financials are being audited and inspected by the regulators. We don't recognise the union-otherwise we would have invited it to go through the financials."

AIBOC had alleged in the memorandum that the bank had 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 of ignoring social banking and financial inclusion.

GD Nadaf, General Secretary of AIBOC said to NDTV Profit, "In November 2010, we wrote a letter to the governor of the RBI that the profitability of the bank is coming down... We thought the RBI will initiate some action... the RBI has acknowledged (our letter) but we don't know its final stand."

Meanwhile, on the Bombay Stock Exchange (BSE), the bank's scrip was trading at Rs62.65 at around 2.35 pm, down by around 12%. Yesterday the stock closed at Rs71.60 on the BSE.