CVC refuses to give vigilance nod to top public sector banks appointments-Times of India
NEW DELHI: The Central Vigilance Commission has refused to grant vigilance clearance to the latest list of those recommended to the post of executive directors in public sector banks, until the government clarifies its position on the names.Sources said the CVC has asked the government to clarify if it endorses the latest list of candidates. The move comes on the back of concerns about irregularities in top level appointments to PSU banks after the Syndicate Bank scandal.
The ED appointments have seen 'back and forth' communication between CVC and the banks, and now the entire process has been escalated to the ministry level.
The CVC has written to the department of financial services- the administrative ministry for PSU banks — asking it to clarify about its stand on the selection of new EDs. The CVC has cited newspaper reports that said the finance ministry has decided to take a relook at the recent appointments of senior level PSU executives.
Finance minister Arun Jaitley had recently written to cabinet secretary Ajith Seth and RBI governor Raghuram Rajan, asking them to review the recent appointments. While RBI governor is the head of the appointment board that selects chiefs for state-run banks, the cabinet secretary processes the papers for the appointments committee of the cabinet.
The finance minister is believed to have asked them to look at some of appointments processed during UPA's last weeks that appeared to be lacking transparency.
Jaitley's letter was prompted by CBI findings in its investigation into the Syndicate Bank loan scandal, in which it arrested bank's CMD SK Jain, Bhushan Steel's vice chairman Neeraj Singal and some others.
CBI chief Ranjit Sinha told the finance ministry that the agency has noted irregularities in senior level appointments during the investigations. CBI had suggested a scrutiny of senior level appointments since it had stumbled upon evidence, indicating that ACRs and interviews were manipulated in some cases. The CBI also suspects that some middlemen may be involved in such manipulations.
The candidates are selected on the basis of marks totalled from both confidential reports (ACRs) and interviews. It is suspected that both the marks were "dramatically altered" to favour certain candidates.
More banks may be without chiefs if the government does not speeds up the selection process-ET
MUMBAI: At least half a dozen state-owned banks, which account for about a fifth of the industry, will be without chiefs by the end of September, potentially hurting their growth prospects and restricting their ability to take advantage of an economic recovery if the government does not hurry the selection process.
Four have been headless for more than a month - Bank of Baroda, Indian Overseas Bank, Syndicate Bank and United Bank of India don't have a chairman and managing director (CMD).
They will be joined by Oriental Bank of Commerce and Canara Bank by September-end with their CMDs set to retire. "The first casualty is decision making," said BA Prabhakar, former chairman and managing director of Andhra Bank, who spent more than three decades in state-owned banks.
"It is not just lending, but policy decisions and new initiatives suffer. The bottom line is bound to suffer. The impact will not be felt immediately, but will show up over a period of time." Appointments have slowed since the government has become cautious with questions about lending practices of some banks.
United Bank of India head Archana Bhargava quit after the bank reported record high losses and a jump in bad loans although she was instrumental in bringing these to light.
Syndicate Bank chairman SK Jain has been arrested by the Central Bureau of Investigation over allegations related to bribes in exchange of the enhancement of credit limits. The Bank of Baroda CMD post fell vacant last month after SS Mundra was posted to the Reserve Bank of India as deputy governor while the term of M Narendra, chief of Indian Overseas Bank, ended in July after he reached the age of superannuation.
Typically, in a public sector bank, when a new CMD is not appointed at the time of the incumbent's exit, the finance ministry delegates those powers to the executive directors.
"Ideally, a bank should have a CMD without any gap. Day-to-day running of the bank will happen, but without a CMD, the entire direction and momentum is lost," said RK Bakshi, former executive director of Bank of Baroda.
"A CMD is appointed with the mandate to give vision and a directional push to the bank." SL Bansal of Oriental Bank of Commerce and RK Dubey of Canara Bank are due to retire in September.
Apart from this, the executive director's post is vacant in banks such as Andhra Bank, Union Bank of India and UCO Bank. A senior finance ministry official who did not want to be identified said the delay is because the government is reviewing the appointment procedure at state-owned banks after the Syndicate Bank episode.
But the United Bank chief left in February while the Syndicate Bank episode occurred last month. The selection process for UBI was completed by April 2014, but the results are yet to be announced
http://articles.economictimes.indiatimes.com/2014-09-01/news/53441541_1_indian-overseas-bank-syndicate-bank-m-narendra
No relief for Kingfisher Airlines, SC doesn't restrain Union Bank from declaring it a wilful defaulter
New Delhi: In a setback for the Kingfisher Airlines, the Supreme Court on Tuesday refused to restrain the Union Bank of India from declaring it a wilful defaulter. "Now that you have been declared a defaulter, you can challenge it in any court," the SC said.
The KFA had approached the SC saying that Union Bank of India be restrained from declaring KFA a wilful offender. The Bank had on Monday declared debt-ridden Kingfisher Airlines and its promoter Vijay Mallya as wilful defaulters.
"We have declared Vijay Mallya and three other directors of Kingfisher Airlines as wilful defaulters," United Bank of India Executive Director Deepak Narang had said.
The Grievance Redressal Committee (GRC) of the bank has declared directors Ravi Nedungadi, Anil Kumar Ganguly and Subash Gupte as wilful defaulters.
Post this declaration, these persons and the entity would not be able to borrow from the bank in future. They would also lose Director-level positions in companies. Criminal proceeding could also be initiated against these persons if warranted.
The GRC meeting was convened on Monday after a Calcutta High Court division bench allowed the bank to initiate the process of declaring them as wilful defaulters last week. The GRC had asked directors to be present before it but no one turned up.
Instead, they had sent a letter through their lawyer stating that they had filed a Public Interest Litigation (PIL) in Supreme Court and pending the judgement
the bank should not proceed in this regard.
The Kolkata-based bank is the first PSU lender to initiate the process of declaring Vijay Mallya and three other directors of the grounded Kingfisher Airlines as wilful defaulters a couple of months ago.
Subsequently, other banks such as State Bank of India, IDBI Bank and Punjab National Bank have also initiated the process of declaring KFA and its directors as wilful defaulters.
The bank's exposure to Kingfisher Airlines was around Rs 350 crore as part of consortium led by State Bank of India. The consortium of 17 banks, has an outstanding debt of about Rs 4,022 crore from the now-grounded carrier and outside the consortium, the bank gave about Rs 60 crore loan for Pre-Delivery payment.
Post this declaration, these persons and the entity would not be able to borrow from the bank in future. They would also lose Director-level positions in companies. Criminal proceeding could also be initiated against these persons if warranted.
SBI to approach CBI against Kingfisher over loan default
After being declared wilful defaulter by United Bank of India, liquor baron Vijay Mallya faces more trouble.
The State Bank of India (SBI) may also soon approach the Central Bureau of Investigation (CBI) for investigating the alleged criminality involved in default of Rs 6,500 crore loan given to it by an SBI-led consortium, according to government officials.
The government is also mulling the bank consortium taking over the management of Kingfisher Airlines.
The government is also rolling up its sleeves to ensure that Mallya is ostracised from the country's financial system and will see to it that no bank grants any loan to Vijay Mallya and all the companies where he is a director.
The companies which have other promoter group members of Kingfisher Airlines on their board will also not be given any further loans.
A senior official said, "The tendency to open accounts in banks which are not part of the consortium has to be curbed. Kingfisher Airlines opened an account in a private bank, which had a balance of Rs 7.5 crore. The revenue from operations was being deposited in that account. If the company had money in another account, where is the question of inability to pay? Is it not a wilful default?"
Ministry of Finance will also approach the Reserve Bank of India (RBI) to address the issue of corporates resorting to opening of current account in a different bank, and depositing revenue from operations in it, rather than in the bank from where they have taken loans. The ministry has unearthed several such instances.
A source in the finance ministry confirmed that SBI is preparing to approach the investigating agency, without pegging a deadline to it, especially after the bank is now armed with a forensic audit on the Kingfisher Airlines account conducted by independent auditor EY.
The audit found instances of diversion of funds by Kingfisher Airlines. SBI in its response to queries from dna, said, "The audit report is being examined by the consortium of banks, all appropriate actions are being initiated."
The government is considering an option of the bank consortium taking over the management of the Kingfisher Airlines. "The two options before us are sale of assets of the company or taking over the management of the company. The second option is more preferable as the first one involves intricate issues such as labour, valuation, etc. Also, the chances of the recovery are better in this option," said the official.
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