Dhanlaxmi Bank is planning to raise funds by December to shore up its capital adequacy ratio and support expansion plans, said Mr Amitabh Chaturvedi, Managing Director and CEO.

In May, the old generation private sector bank had announced that it would be raising Rs 1,000 crore in FY2012. It had a capital adequacy of 11.4 per cent as of end-June 2011.

Clarifying the bank's stand on allegations of fudging of accounts and under-provisioning at a press meet, Mr Chaturvedi said there was no concern with regard to asset quality, compliance and governance.

The bank is examining the possibility of taking legal action against the trade union which had made these allegations, he added, but did not clarify further.

The Dhanlaxmi Bank Officers' Organisation (DBOO), which is affiliated to the All-India Bank Officers' Confederation, had alleged that Dhanlaxmi Bank is heavily dependent on bulk accounts and is dressing its balance sheet to shore up profits. The bank's stock had fallen to a year's low on Tuesday, following these allegations.

However, on Wednesday, the stock gained 2.48 per cent on the BSE to close at Rs 66.05.

In a presentation on Wednesday, Mr Bipin Kabra, Chief Financial Officer, said the bank's interbank deposits, borrowing in the call money market, bulk deposits and non-performing assets were within limits.

For instance, the bank had interbank deposits of Rs 1,077 crore and not Rs 1,600 crore as alleged by the union. Its Certificates of Deposits were to the tune of Rs 1,200 crore and not Rs 2,500 crore. Against deposits of Rs 13,000 crore, the bank's borrowing in the call market was only Rs 300 crore while the RBI has set a borrowing limit of Rs 1,000 crore.

The gross NPA as on June 30, 2011, was 0.63 per cent, indicating that asset quality was not under pressure.

Advances

With regard to the allegation that buyouts constituted a majority of its advances, Mr Rajeev Deoras, Chief Credit Officer, said only 17-18 per cent of the total advance book is done through buyouts, although the bank has an internal limit of 20 per cent. The total advances were to the tune of Rs 10,000 crore.

About the union's allegation that employees were not paid bonus as promised, Mr Chaturvedi said it was a decision taken by the board as the bank did not make sufficient profits. The net profit as on June 30, 2011, was Rs 3.4 crore.

Approximately 25 per cent of Dhanlaxmi Bank's 1,298 employees are part of unions, of which DBOO is one. The bank has a total employee strength of 4,780 and about 500 of them are DBOO members.

The bank did not see any unusual withdrawal of money through its branches following the allegations. Branches were kept open till late evening on Tuesday and were opened early on Wednesday, said Mr Manish Kumar, President-Human Resources. “A total of Rs 80 lakh was withdrawn from all 275 branches across the country,'' he said.

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