Chandigarh, June 24
The unsavoury controversy facing Punjab & Sind (P&S) Bank has taken a serious turn with the chairman-cum-managing director (CMD) RP Singh demanding ouster of all five non-official directors.
His opponents, the non-official directors, have gone on record criticising the bank management for its various acts of omission and commission, accusing it of showing undue favour to Orbit Resorts, a Gurgaon-based resort, promoted by acting president of the Shiromani Akali Dal Sukhbir Singh Badal.
But the bank management has ridiculed the criticism maintaining that the loan sanction to the resorts in principle was done on merit and in accordance with the laid-down norms of the banking industry.
The CMD has reportedly written a demi-official letter to the union finance minister quoting instances of interference by these non-official directors in the routine functioning of the bank. He has cited their inexperience as his reason to seek their ouster from the board.
The Tribune was the first newspaper to break the story about growing dissent among managements and non-official political directors of various nationalised banks, In some cases, even matriculates and persons with strong political affiliations have been on the boards of major nationalised banks of the country. These appointments were made in violation of the guidelines laid by the union ministry of finance, which suggest that, only those having background in economics and finance and experience in banking, with a minimum
qualification of graduation from a recognised university, should be considered for appointment as a director in a nationalised bank.
While the bank management, including its CMD RP Singh, has described allegations of the five directors as ‘baseless and a desperate retaliation’, the union ministry of finance is reportedly taking cognizance of the letter of the bank management.
Interestingly, the union finance ministry has permitted the management of the Punjab & Sind Bank to go to the media. This was done so that the management could give its point of view to counter allegations leveled by the non-official members, who are political appointees and have ‘little or no knowledge of the banking industry as a whole and finance management or economics in particular.’
The five non-official members had gone public making allegations against the top brass of the management in general and its CMD in particular; hence the ministry’s permission the management to talk to the media.
According to some reports the union ministry of finance has already moved a file for removal of political appointees from boards of management of various nationalised banks.
The P&S Bank management has clarified that it has given “in principle” approval for sanction of credit facilities amounting to Rs 150 cr to Orbit Resorts for its upcoming project in Gurgaon purely on financial and administrative considerations.
“It was purely a commercial decision taken by the board of the bank unanimously. Kamal Mann, one of non-official directors, who too, has joined the tirade against the bank management, was also a part of the unanimous decision. At the time of loan approval Kamal Mann had a special word of praise for the project. Further, the resolution of the management committee of the Punjab and Sind Bank stipulates that ‘regular sanction’ would be on the lines of sanction given by the Punjab National Bank (PNB).”
“Since the PNB has already sanctioned the loan in favour of Orbit resorts for Rs 137 cr at a rate of interest of 11.5 per cent, the sanction of Punjab & Sind Bank will be on the same terms and condition as of the PNB,” the P&S Bank official communication said.
The bank management is expected to present its case quoting facts and figures before the media later this week.
