June 24, 2018 12:38:31 am
With a spate of chargesheets and arrests of bankers by several government investigative agencies rocking the troubled sector, the Indian Banks’ Association (IBA) has sought buying insurance cover for bankers to ensure indemnity against frivolous charges by investigating agencies.
Bankers at the meeting, held by IBA on Friday, proposed insurance cover for officials so that they can bear the legal expenses while fighting the cases in the court of law while in service and after retirement. The IBA, the official representative body of the banking industry, is now looking to pool in banking resources to buy such insurance covers, said V G Kannan, CEO of the IBA.
Though there are insurance products available to cover various risks faced by the bankers while discharging their duties, a ready-made packaged product, the way IBA wants, may not be available right now. To design such products, reinsurers will have to be roped in and a lot of information will have to be provided and the bankers may not be willing to part with such information, said R Chandrasekaran, secretary general, General Insurance Council.
“The banks individually have taken different kind of covers, but this is the first time that there is a collective demand as stated by the IBA. We will definitely look into their demands when approached formally by the IBA,’’ said an official from New India Assurance. “Bankers are facing unprecedented investigation and proceedings. Alleged charges are serious in nature. They would require effective defence which would be very expensive. Directors and Officers Insurance would provide them adequate protection in the form of defence and settlements,” said AS Manoj, liability head, Global Insurance Brokers, one of the leading liability brokers.
Explaining one of the important features of the product, Manoj said fraud and dishonest exclusion applies only if those charges are adjudicated against them by final adjudicator. Customised policy structuring will avoid coverage ambiguities. “The public sector in general has stayed away from availing D&O insurance. With growing emphasis on governance, defending key management persons should be an essential element of every PSU’s risk management policy,” said the CEO of a leading private insurance company.
Bankers, especially from the public sector, have been facing the heat from the Central Vigilance Commission (CVC) and the Central Bureau of Investigation (CBI) as these agencies look to pin the blame of record rise in non-performing assets (NPAs) on these lenders. The demand for insurance cover came in the wake of the arrest of five Bank of Maharashtra (BoM) officials, including CEO Ravindra Marathe, by the Economic Offences Wing of the Pune Police this week for allegedly colluding with real estate developer DS Kulkarni to divert money and cheat shareholders.
In January 2017, former IDBI Chairman Yogesh Agarwal and four other executives were arrested in a case linked to the Vijay Mallya loan default. Former Canara Bank chairman RK Dubey, former United Bank of India chairman Archana Bhargava, former Punjab National Bank CEO Usha Ananthasubramanian and former IDBI Managing Director Kishor Kharat (who is now with Indian Bank), Syndicate Bank MD Melwyn Rego (who was formerly with IDBI Bank) and former IDBI Bank CMD MS Raghavan are also facing charges. BoM officials are the latest to face the action of investigative agencies.
📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines
- The Indian Express website has been rated GREEN for its credibility and trustworthiness by Newsguard, a global service that rates news sources for their journalistic standards.