Jammu and Kashmir Governor Satya Pal Malik’s administration Saturday removed the chairman and managing director of J&K Bank, Parvez Ahmed and appointed the bank’s executive president, R K Chhibber interim chairman.
Hours after Ahmed was removed, the J&K Anti Corruption Bureau raided the premises of the bank’s headquarters ahead of a scheduled meeting of the board of directors.
Ahmed was appointed chairman in October 2016 and his tenure was to end in five months. Shortly after the announcement was made, Ahmed said on Twitter, “Absolutely no regrets. Did my job most diligently, honestly and in the best interest of the institution. Open to scrutiny on each and every transaction I have done during my two decades of functioning in the bank.”
In a statement issued Saturday, the state government said that the change in leadership at J&K Bank was done “keeping in view the concerns expressed in various quarters” regarding the governance and functioning of the bank.
As a first step, the statement said, “the Government has decided to change its nominee director on the Board of JK Bank, Mr Parvez Ahmed.”
The government also announced a search committee to identify a suitable panel of names to be appointed to the bank’s board and subsequently, for consideration as managing director.
Sources in the bank said that the raids were conducted on the second floor of the headquarters in Srinagar which houses the Human Resources department, and the chairman’s office on the fourth floor.
An independent director on the board of J&K Bank told The Sunday Express that a board meeting was scheduled Saturday at 10.30 am. “The board met a little later and decided to appoint R K Chhibber as the new interim chairman.” The board also approved the appointment of a Compliance Officer.
Sources said that Ahmed was called by the J&K Chief Secretary for a meeting in the morning, where the state government’s decision was probably conveyed.
The bank’s executive has been dragging its feet on separating the posts of chairman and managing director as required under RBI guidelines. “The independent directors had been raising this issue for a while, but a decision was being delayed,” said the independent director.
Bifurcating the CMD post requires changes to the bye-laws of the company. “This has to be approved by the shareholders. The Annual General Meeting was scheduled in July. But the bank could have always called for an Extraordinary General Meeting to comply with RBI guidelines. This was also not done,” said another source.
Underscoring that the bank was repeatedly directed by the RBI to separate the posts of chairman and managing director for better governance, the government statement said that steps will be initiated through the board to make necessary changes “with adequate safeguards in the functioning of the Board to ensure high levels of financial probity, financial control, better risk management and oversight”.
On April 30, the Union Home Ministry, while calling for “cleaning” of J&K Bank, had asked the state government to investigate “large and dubious” loans, and appointment of non-executive chairman and separate managing director.
Meanwhile, the Kashmir Anti Corruption Bureau has registered a case under the Prevention of Corruption Act based on a written complaint it received to look into allegations related to “illegal/fraudulent appointments made in JK bank.”
“Immediately after registration of FIR, searches of premises of corporate office J&K Bank Head Quarters were conducted and during search operations documents/discriminatory material pertaining to the appointments were seized,” said the ACB.
In November 2018, the Governor-led State Administrative Council had approved a proposal to turn J&K Bank to a Public Sector Undertaking (PSU). The move was rolled back followed stiff opposition from the Bank’s employees as well the political parties of the state. J&K state holds a majority or 59.3 per cent stake in the bank.
Former Chief Minister Mehbooba Mufti, during whose tenure Ahmed was appointed, had then termed the decision, “disturbing step to snatch every bit of autonomy that our institutions have”.
Defending the decision, Governor Malik had stated that only those with “personal or political interests” in J&K Bank are opposing the move to turn the bank into a PSU and the opposition is “without merit.”
The bank’s media liaison officer Dr Mir Javid told The Sunday Express, “The government holds 59 per cent equity and it is their decision to make. Ideally, the chairman’s term is three years and Mr Ahmed’s term was scheduled to end in October this year.”