KOCHI: The Travancore Devaswom Board (TDB) has courted big trouble as the Kerala Audit Department has revealed the board purchased bonds worth Rs 150 crore of the crisis-ridden Dhanlaxmi Bank, diverting the Devaswom Employees Provident Fund and the Temple Employees Provident Fund without conducting a proper study or risk analysis.
In a report submitted before a Kerala High Court Bench that considers matters pertaining to the TDB, the Audit Department stated the fund utilised for such investment being a debt head account like ‘Temple Employees Provident Fund’, more concern should have been given to the risk factors of the investment. The TDB should have taken ample time and expert opinion before making such a drastic move.
As many as 58 fixed deposits having a maturity value of Rs 152.18 crore were closed prematurely for purchasing the bonds on March 28 last year. The board meeting held on March 22, 2018 had decided to purchase tier 2 bonds of the bank.
The audit department said it was a hasty decision without proper study. Information from the bank, regarding the issue of debentures, report of the accounts officer and approval of TDB for purchasing the debentures - all happened in a single day without giving any time for proper study or risk analysis. It had not obtained any technical advice from any competent agency. Investment in bonds and shares is subject to market risks and, hence, they are usually made after a thorough and careful market study.
However, Devaswom board president A Padmakumar said the board’s decision was for the benefit of the devaswom. “With this, a sum of around Rs 6 crore has been credited in the account of the devaswom. The board is ready to rectify errors if found,” he said. Padmakumar said he is yet to examine the report filed before the High Court by the audit department.
TDB didn’t explore any other option
The bonds were rated as BB+ (BB stands for an instrument with moderate risk) by agencies like Credit Analysis and Research Ltd. The code for highest safety instrument is AAA. The report said the facts and figures clearly depict a bleak picture of the bank and investing in non-equity shares of such a not-so-good performing bank is detrimental to the financial security of the board. The board has not looked for any other alternative options. Term deposits in government treasuries bear more than 8 per cent annual interest and is safe more than the unsecured debentures of private banks.