Shares of Dhanlaxmi Bank slid 24 per cent in Tuesday's afternoon trade after the All-India Bank Officers Confederation raised several questions about the lender's financial health.
The stock opened flat, but surrendered the gains thereafter, tumbling to a 52-week low on the BSE and the NSE. It hit a low of Rs 54.25 on the BSE and Rs 54.30 on the NSE. The stock on the BSE closed at Rs 64.45, a fall of 10 per cent over the previous day's close of Rs 71.60.
Alleging manipulation of accounts and provisioning, mismatch in asset-liability resources and huge dependence on call money borrowing in the Kerala-headquartered Dhanlaxmi Bank, the All-India Bank Officers Confederation (AIBOC), Kerala State Unit, has demanded the banking regulator to conduct a detailed enquiry into the affairs of the bank.
Mr Abraham Shaji John, State Secretary, AIBOC Kerala, has in a statement urged the Reserve Bank of India to conduct fair and independent enquiry by keeping the bank's Managing Director and other interested parties away from their positions.
However, a clarification from the bank lifted the stock from the day's low. “Dhanlaxmi Bank would like to unequivocally reiterate that all such allegations are baseless and represent a motivated attempt by one of the employee associations de-recognised by the bank,” it said in a statement.
According to Ms Soujanya Pantula, Head, Investor Relations, “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.”
The central bank had last week granted the bank's MD and 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, she clarified.
However, the AIBOC has through a memorandum to the RBI appealed to initiate investigations against the bank management and asked that the bank be merged with a public sector bank to safeguard the interest of employees and customers.
The stock witnessed high intra-day activity. According to bulk deal data on the NSE, Jupiter South Asia Investment Co and The Royal bank of Scotland have bought eight lakh and 10 lakh shares, respectively, at an average of Rs 64.02 a share. However, Swiss Finance Corporate has offloaded about 7.52 lakh shares at an average of Rs 62.92.