allegations of graft. State government takes measures to clean up J&K Bank

With instances of loans being granted and recruitment made allegedly on the recommendations of influential politicians coming to light, Jammu and Kashmir Bank’s promoter — the State-government — swung into action on Monday to limit the damage.

It announced a host of measures, including splitting of the post of Chairman and Managing Director, and bringing the bank under the purview of the Right to Information (RTI) Act and the Central Vigilance Commission (CVC).

Likely to stir up a storm

The move to bring the private sector bank (PvB), which is majority owned by the J&K government, under the purview of RTI and CVC, could stir up a hornet’s nest among the political class in the State. The State Government holds 59.23 per cent stake in the bank.

Currently, PvBs are out of the purview of RTI and CVC. It may be pertinent to note that J&K is currently under President’s rule.

The bank’s board of directors has recommended splitting the position of Chairman and Managing Director, thereby enabling it to comply with RBI and SEBI guidelines.

A director on the board of the bank told analysts that the balance of delegation of power between the Chairman and Managing Director and the board will ensure that the functioning of the bank is absolutely in sync with what investors desire.

While the board of directors have been very closely associated with its functioning, the director underscored that the bank would like to be in a situation where checks and balances are in line with the best practices. Moves are afoot to further strengthen the oversight of the bank. One of the objectives that the bank has is to reduce the aggregate risk.

To improve transparency levels, the board has decided that it will implement RTI provisions. It also decided to implement the CVC guidelines for the banking sector to bring in accountability and to improve the overall functioning of the bank.

“We have been very keen on improving the transparency levels in the bank. The idea being that if there are any issues, then those need to be clearly recognised and addressed in a timely fashion. “At another level, we have decided to strengthen the preventive vigilance mechanism in the bank so that we don’t address an issue after the event has happened. In fact, we would like to see a situation in which we address issues in real-time,” the director said.

Performance indicators

The board has decided that there will be key performance indicators at all levels so that employees know what is expected of them, and then they can be evaluated. The evaluation will be communicated in time so that the bank moves in the direction that investors desire, explained the director.

Meanwhile, the bank informed the exchanges on Monday that it has received the RBI’s approval for the appointment of RK Chhibber as interim Chairman and Managing Director (CMD) for three months with effect from June 10.

On Saturday, the bank intimated the exchanges that Chhibber has been nominated by the State Government as a director on its board, and may be further appointed as the interim CMD. The board of directors, pursuant to the government order and subject to RBI approval, appointed him to the position with effect from June 8.

Simultaneously, the State Government order said Parvez Ahmed, CMD, will cease to be director on the board of directors of the bank, and consequently be no longer the CMD of the board.

With regard to the news of raids conducted by Anti-Corruption Bureau on the bank’s headquarters, the promoter-director on the board of the bank clarified that investigation was ordered by the State Government on the basis of some complaints / reports of alleged malpractices and governance issues in the bank so that the facts are brought forth.

The bank’s scrip took a beating, closing at ₹52 apiece, down 12.53 per cent over the previous close on the BSE.

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