New Delhi, June 24
Two non-official Board of Directors of Punjab and Sind Bank (PSB) have accused its chairman R.P.Singh of flouting rules and RBI guidelines in sanctioning Rs 150 crore loan at a lower rate of interest to Punjab Chief Minister Parkash Singh’s son Sukhbir Singh Badal for the Orbit hotel in Gurgaon.
The non-official directors Harcharan Singh Josh and U.K.Sharma told mediapersons here that the loan was sanctioned at an interest rate of 11.5 per cent, well below the bank’s current preferential lending rate of 14 per cent.
“The chairman has not only sanctioned the loan at a much lower interest rate, but has also violated the RBI guidelines by not taking collaterals security,” they claimed. Josh said the chairman has done this when the Centre had sanctioned Rs 500 crore last year to improve the financial health of the bank, which is completing 100 years today.
At a time when the bank’s financial health is not that sound and the NPA is higher compared to other banks, such favouritism is inimical to the bank’s performance, it was pointed out.
“It would have been prudent on part of the bank to spread the Rs 150 crore among several loanees at a much better rate of interest than putting in one basket without securing collaterals,” they said.
“Extending such a huge amount to a single party whose past track record has not been so impressive is not in the interest of the bank and always runs the risk of recovery,” they said.
Josh and Sharma, who belong to the Congress, said they have already written a letter in this regard to Prime Minister Manmohan Singh and Finance Minister P. Chidambaram seeking their intervention.
Josh claimed that the chairman has also shown favour to Badal by fixing a much longer period of 11 years for the repayment of the loan, while normally for such loans about six to 9 years are allowed. Significantly, the loan was sanctioned soon after Badal took over as the Chief Minister of Punjab.
When asked whether their allegations were politically motivated, Josh and Sharma said “It is nothing to do with politics. We are only concerned with the improvement of the financial health of the bank.”
However, the bank’s chairman R.P.Singh refuted the allegations, stating that the loan has been approved only “in principle” and on the basis of merit.
Singh is due to address a press conference on Monday on the issue.
