NEW DELHI: The finance ministry's "polite nudge" forcing some top executives at
state-run financial institutions to resign recently shows its drying patience
with the rising tide of bad loans at public sector banks and closer scrutiny of
those responsible for it.
In the past 10 months, chairpersons of a
financial institution and a bank, a pension sector regulator and at least one
independent director on the board of a bank have quit their posts.
Terming the spate of exits as unprecedented, some senior bankers told ET that
more resignations are likely to follow as investigations proceed against
executives accused of mismanagement or misappropriation. "This is unprecedented.
Never in the history of state-run financial institutions so many resignations
have been put and accepted within a period of 10 months or so," said the
chairman of a state-run bank. Another banker said that by "politely nudging"
Archana Bhargava to step down from the post of CMD of United Bank last month, the finance ministry was trying to
convey the message to incumbent heads and directors of financial institutions to
either perform or perish.
United Bank's non-performing assets (NPAs),
or bad loans, jumped nearly three times to Rs 8,546 crore at the end of December
last year from Rs 2,964 crore in March 2013, forcing the bank to report an
unprecedented Rs 1,238-crore loss in the December quarter.
Gross NPAs of public sector banks rose to Rs 2.03 lakh crore in the quarter to September
2013 from Rs 1.55 lakh crore in the previous quarter.
"Some of these
decisions, including UBI, are not hurried but rather well calibrated to minimise
the damage," said the head of a state-run financial institution, adding that
executives against whom complaints of mismanagement or misappropriation are
pending are already facing the heat.
"Some cases are under various
stages of investigation There will be more such resignations," said a finance ministry official.
Bankers agree that the warming up of ties between the department of
financial services (DFS), which administers state-run financial institutions,
and Reserve Bank of India, the sector regulator, has also played a key role in
these swift resignations. "DFS, under its secretary, Rajiv Takru, has managed to
get these resignations without any furore," said an executive director with a
state-run bank.
Read more at:
http://economictimes.indiatimes.com/articleshow/31752960.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
http://economictimes.indiatimes.com/articleshow/31752960.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
No comments:
Post a Comment