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Friday, June 15, 2012

Khanday’s entry in J&K Bank’s BOD becomes albatross in Govt’s neck

Dispute thickens over Finance Secretary’s Due Diligence form

Ahmed Ali Fayyaz

SRINAGAR, Jun 14: Absence of the state government’s Finance Secretary, Iqbal Khanday, in Board of Directors (BOD) of Jammu & Kashmir Bank Ltd (JKB), running through sixth month after his appointment, is fast turning into an embarrassment for the bureaucracy. It is now becoming clear that Chief Secretary, Madhav Lal, and then Commissioner-Secretary General Administration Department (GAD), Mohammad Sayeed Khan, had not properly advised Omar Abdullah’s cabinet on sensitive service matters before the senior IAS officer’s appointment as Principal Secretary Finance in December, 2011.

The Cabinet shifted Khanday from Department of Agriculture Production and appointed him administrative Secretary in Department of Finance in place of Mr Sudhanshu Pandey on December 16th last year.

By virtue of his appointment, Finance Secretary automatically becomes the state Government’s official representative and Director in JKB’s BOD. However, website of the bank that has 53.17% equity from Government of Jammu & Kashmir, has been continuously mentioning Pandey as a Director on Board, though he too has not been invited for any meeting. Since December last, Pandey has been functioning as administrative Secretary of Power Development Department.

Well-placed sources in the state bureaucracy revealed to Early Times that neither Chief Minister Omar Abdullah nor any other member of his Cabinet had been informed about certain technical aspects of Mr Khnaday’s new posting before the administrative reshuffle in December last.

“Finance Secretary does not automatically become a Director on Board. Under RBI guidelines, he is supposed to fill up Due Diligence form on his appointment as well as on or before March 31st every year following which the bank formally inducts him into BOD”, said a bureaucratic source. He revealed that Mr Khanday was not in a position to fill up and furnish such a document of declaration due to the ongoing proceedings against him in a criminal matter in a Chandigarh court. This, he said, was very much in the Government’s knowledge in December last.

At least one official in GAD insisted that Mr Khanday’s continued absence in JKB’s BOD was the result of “machinations” by certain elements in the bank as well as in the government. On condition of anonymity, he asserted that the formality of the Due Diligence form could be dispensed with and Mr Khanday could have been inducted into the BOD. According to him, Finance Secretary of the state government would automatically become “ex-officio Director” in the bank’s BOD and he was not bound by rules to furnish any declaration of integrity and being free of all legal encumbrances.

“That’s absolutely wrong” retorted a senior executive in JKB. “Filing of Due Diligence form and some other documents is part of RBI’s directives and the Ganguly Committee recommendations. Each and every nominee Director, including the Chairman and the RBI’s representative in BOD, is supposed to file the form at the time of induction as well as around March 31st every year. They are bound to declare that no criminal matter is pending against them in any court or Police Station”, he added. According to him, it was only RBI’s prerogative to dispense with this formality and claimed that neither the state government nor JKB had authority by rule to make any relaxation. He further claimed that all the Government’s nominee Directors and Finance Secretaries including Jaleel Ahmad Khan, Mohammad Shafi Pandit and Sudhanshu Pandey, had filed the Due Diligence form without default in the past.

Other sources in the bank said that the formality of filing the Due Diligence form was necessary as the RBI teams did every year scrutinize the antecedents of the Directors on Board of the bank before certifying ‘Fit and Proper Criteria’.

Chairman of the bank, Mushtaq Ahmad, was not available for comment as he was said to be attending an investors’ convention in United States of America. Secretary of Board, Abdul Majid Bhat, picked up the phone but dropped it repeatedly after learning that his comment was being sought with regard to Mr Khanday’s continued absence in the BOD meetings.

President incharge Board matters, Human Resource Development and Corporate Communications, Abdul Rauf Bhat, pleaded that he was not authorized to speak on the subject. “This is a sensitive and far higher matte, definitely beyond my competence and jurisdiction”, he said on phone. He, however, confirmed that certain documents were “still awaited from Finance Department, though the bank has long back sent its welcome letter to the new Finance Secretary and desired fulfillment of certain formalities”.

Sources insisted that the bank would proceed with its agenda of holding Annual General Meeting (AGM) of all the shareholders, tentatively on July 14th next, at SKICC with or without Mr Khanday’s induction into BOD. Two of the seniormost Directors, namely Mohammad Ibrahim Shahdad and Vikrant Kuthiala, are being eliminated under rules to pave way for appointment of the new incumbents. Government is competent to nominate two fresh non-official individuals for BOD and can also re-nominate one or both the outgoing Directors.

With existence of Chairman and seven Directors, including the RBI representative, in the BOD, four slots of Directors are currently vacant in the bank’s highest decision making body. The vacancies include that of the state government’s Finance Secretary. It was not clear until today whether the bank, in coordination with the government, was going to fill up all the four vacancies or was simply restricting the agenda to filling up the vacancies caused by Shahdad’s and Kuthiala’s elimination.

Previously, two Executive Directors, namely A K Mehta and Abdul Majid Mir, were also part of the bank’s BOD. While as Mehta retired on May 31, 2011, Mir reached superannuation on June 30, 2011.  However, their replacement too has not come in the last over one year.

In the topmost executive level, bank has currently three Executive Presidents, namely Tafazal Hussain (36 years of service), Sahibzada Ghulam Mohiuddin (37 years of service) and Parvez Ahmad Nengroo (14 years of service). None of them has been elevated to the rank of Executive Director.

Out of 16 Presidents, three (Madan Lal Gupta, Abdul Rashid and Mohammad Afzal Khan) have retired recently and these slots are also lying vacant.


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