The Hindu Business Line : Punjab & Sind Bank chief wants board recast

Civil war
`Directors trying to frustrate debt recovery'
Interference in auction process of debt sale
Board has 5 directors appointed by Govt

Mr R. P. Singh

New Delhi June 25 A virtual war has broken out on the board of Punjab & Sind Bank, with the Chairman and Managing Director, Mr R.P. Singh, asking the Finance Ministry to reconstitute it and induct professional independent directors.

The move comes in the wake of attempts by politically affiliated directors on the board to frustrate the debt recovery measures of the bank and even thwart sale of debt through auction route, according to Mr Singh.

He has also sought the Finance Ministry's approval for appointing Government and RBI nominees in the Managing Committee, stating that their removal had proved to be counterproductive for the bank.

"I have requested the Finance Ministry to reconstitute the bank's board. In the last 8-9 months, the functioning of the bank has come to standstill. We need independent directors who are professional in their approach and also understand banking practices better," Mr Singh told presspersons today.

The bank is fully owned by the Government and has 11 members on the board, including five political directors appointed by the Government.

A capital infusion of Rs 500 crore by the Government in September 2005 helped the bank in recording a net profit of Rs 108.32 crore for 2005-06 and net profit of Rs 218.53 crore in 2006-07.

In the last two years, the bank has recovered, in cash, about Rs 550 crore of bad debts.

Mr Singh contended that politically affiliated independent directors were interfering in the day-to-day operations of the bank and trying to block the auction process of debt sale in certain cases, to ensure that the defaulters get settlement with the bank at paltry amounts.

He refuted the allegations made by non-official directors, led by Mr Harcharan Singh Josh, that he was showing favouritism in sanctioning loan without collateral and at lower interest rate to the Orbit Resorts expansion project, which is being promoted by the son of a top political leader from Punjab.

Mr Singh said that the bank was the lead banker to the project and had given only in-principle nod for loan of Rs 137 crore for the project.

"Orbit Resorts is one of our best accounts. It has been with us since 2000. It has never become an NPA. We gave only in-principle approval; Punjab National Bank (the other bank in the consortium) gave formal sanction for a loan of same amount."

More Stories on : Public Sector Banks | Non-Performing Assets | Politics | Restructuring

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Punjab & Sind Bank chief wants board recast