Seek probe into Dhanlaxmi Bank's 'window dressing': AIBOC

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Allegations of the All India Banks' Officers Confederation or AIBOC, a Kerala based state union, on the financial health of Dhanlaxmi Bank slipped the share down by 21% today.

Raising concerns over the public money invested in the bank, in an interview to CNBC-TV18, GD Nadaf, general secretary at All India Bank Officers' Confederation alleged 'window dressing' of the company's books to inflate profits.

He says the issue were raised over a year ago and only to draw the attention of the government and Reserve Bank of India now, AIBOC has accelerated the agitation.

"The actual position, according to AIBOC is hardly around Rs 3 lakh in profits, whereas inflated profit has been shown. Therefore, we demand that an independent authority to conduct an investigation and check the position of the bank," Nadaf added.

Below is an edited transcript of GD Nadaf's interview to CNBC-TV18. Also watch the accompanying video.

Q: What are your key apprehensions are with regards to Dhanlaxmi Bank and what are the steps you have undertaken at this point in time?

A: The state unit of the All India Bank Officers' Confederation (AIBOC) Kerala and our unit at Dhanlaxmi Bank Officers' Organization, Thrissur had written to the government and also Reserve Bank of India earlier about how the accounts are maintained, the profits are inflated etc. Unfortunately, we don't know whether Reserve Bank of India or the government had investigated it properly back then.

Now, our impression is that the bank is not in a position to survive further because the balance sheet is not showing the factual position. And, there are window dressings in it. We are afraid that about the intention of the present managing director -as to if he would like to come to show the bank in the red and finally sell it to outsiders. We have already lost one such Lord Krishna Bank.

We don't know whether Dhanlaxmi Bank is in the queue and this will be sold to a foreign bank. Therefore, All India Bank Officers' Confederation, Kerala state unit today is observing a dharna before the Reserve Bank of India, Trivandrum which has been inaugurated by Thomas Isaac the former Finance Minister of the Kerala.

Q: Could you tell us the key points of concerns with respect to where Dhanlaxmi Bank has shown this wrongdoing? When did you put this proposal forth to the RBI, what has their response been?

A: There is no response from the Reserve Bank of India. However, the other day when our delegates met the RBI officials at Trivandrum we are told that the officials said they are aware of certain things.

However, as the present managing director's term comes to an end, we are told that RBI is likely to consider extending his term for next three years. So, the organization is upset because all is not clean, as far as the balance sheet is concerned. The profit that was shown in the balance sheet is not factual.

Q: So, do you know what the factual position is because we can see that the profitability is down 43%?

A: The actual position according to AIBOC is hardly around Rs 3 lakh in profits, whereas inflated profit has been shown. Therefore, we demand that an independent authority should conduct the investigation and check the position of the bank because we are worried about the public money involved.

Q: What makes you substantiate your claims at this point in time and why exactly has this come up now?

A: It has been there last one and half years and today because we came to know that the person who is heading the bank - Mr. Amitabh has been given an extension of another three years period, we think it will be too late if not now. We were hoping at the end of his term, a new person will come and he will salvage the bank. However, with possibility of the same person continuing for next three years, we have lost faith. Therefore, to draw the attention of the government and Reserve Bank of India now, we have accelerated the agitation. It is in the interest of the bank and common man.