FinMin rules out replacing CMD, directors in PSB

FinMin rules out replacing CMD, directors in PSB
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First Published: Sun, Jul 01 2007. 04 58 PM IST
Updated: Sun, Jul 01 2007. 04 58 PM IST
PTI
New Delhi: The Finance Ministry has ruled out replacing the chairman or the non-official directors of Punjab & Sind Bank to resolve the dispute between them and wants the two sides to make peace with each other.
“We have no plans to transfer the CMD of the bank as any such decision would send wrong signal to bank employees. Nor there is plan to change or shift the present non-official directors to any other bank due to political reasons,” a Finance Ministry official told PTI.
However, he added a decision could be changed if the Prime Minister’s Office issues any directions in this regard.
PSB chairman and managing director R P Singh had on 25 June alleged that five non-official directors led by Congress leader Harcharan Singh Josh were running a campaign to shield certain defaulters whose properties had been put on auction.
Singh had asked the Centre to restructure the board of directors and replace the five non-official directors with persons of professional background and personal integrity.
Discounting reports that the fight between the management and non-official directors had delayed the bank’s initial public offer, the ministry official said: “The bank has not so far send any proposal to bring out an IPO.”
Sources said Finance Ministry would soon approve a proposal to restructure the bank’s equity amounting to Rs743 crore by converting a part of it into preferential shares. This would be done to facilitate the bank to come out with an IPO later next year as was done in the case of Central Bank and Indian Bank.
The bank management has also alleged that defaulters and the directors colluded to negotiate NPA (non-performing assets) accounts for paltry sums.
These allegations were preceded by complaints by the directors to PMO and Central Vigilance Commission that Singh had sanctioned a Rs 150-crore loan to Akali leader and Punjab chief minister Parkash Singh Badal’s son Sukhbir Singh Badal for his Orbit Resorts project in Gurgaon at a low interest rate and without collateral.
Josh and other directors — K K Sharma, U K Sharma, Kamal Maan and Krishna Mohini — had asked the government to take action against Singh, charging him with sanctioning the loan for the resort that had questionable source of funding.
“It is not the job of bank to look in the source of funding. It cannot be expected to deny loans to any project on political grounds,” the Finance Ministry official added.
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First Published: Sun, Jul 01 2007. 04 58 PM IST