Amid chronic, corona triggered financial stress, stakeholders await J&K Bank succession plans

SAHIL RASGOTRA. Updated: 4/1/2020 10:46:09 AM Front Page

Chibber's term ends next week; scope open for outsider' MD

JAMMU: Amidst financial worries triggered by the Coronavirus pandemic, there is a speculation about succession plans of Jammu and Kashmir Bank, the premier financial institution of the erstwhile State, as the government which holds a majority stake in the lender, looks for a replacement Managing Director (MD) ahead of the end of incumbent Rajesh Kumar Chhibber’s term next week.
Chibber, who took over the bank's reins as interim Chairman and Managing Director (CMD) following the sacking of Parvez Ahmed in June last year, has received two extensions by the RBI so far, and if the bank sources and official notification by the bank are to be believed, his replacement is most likely to come from outside the Jammu and Kashmir.
With Chibber’s term coming to an end on April 9 this year, the bank has apparently made progress in this direction as a notification was issued on March 27 inviting applications for the position of Managing Director of the bank, for tenure of three years.
Our insiders in the bank said that this notification came up as a surprise for the bank officials as well.
After Haseeb Drabu, the last three chairmen of bank-- Mustaq Ahmad, Parvez Ahmad and R K Chibber—rose to the higher ranks from bank’s internal bureaucracy and hence the expectation was that the new chairman and MD will come from within bank only. The bank had even constituted a panel to select the new MD, with a number of bank officials—some serving and some recently retired—shortlisted by it.
However, some components of the notification suggest that the government is not looking at the bank’s bureaucracy only for picking up the new MD.
The applications have been invited from any citizen of India which essentially means that the government has kept the possibilities open for picking up an MD from outside Jammu and Kashmir as well.
This also resonates with the fact that on the board of directors of the bank once dominated by J&K residents, 7 of the 8 directors are now from outside the region.
Interestingly, the notifications also states that the age of the applicants must be in the age group of 45 to 57 years. Taking in consideration the upper age limit of 57 years, the prospects of any local senior official making it to the top post are doomed.
Keeping in mind both these notes, one thing is almost certain that no one from bank’s internal bureaucracy or anyone who has retired recently is a possible contender for the post.
While on his part, Chibber is making his own efforts to get an extension, the banking experts are of the opinion that an extension for him at this juncture will not be in the favour of the bank.
“The Jammu and Kashmir bank’s status is already a little compromised; it is neither a fully private nor a fully public sector bank. In this view, there is a dire need to take some hard decisions particularly in these testing times, so as to pick someone who can handle the bank’s already stressed financial situation efficiently,” opines a professional.
The bank is already facing a number of issues including corruption charges on at least two former chairmen of bank, the leadership crisis, the rampant ad-hocism, the rise of NPAs in view of the bad loans sanctioned by the officials in violation of procedures.
The position of reconciliation of Non-Performing Assets (NPAs) is to be divulged before 31 March every year. However, it is not sure whether the bank has taken the shareholders in confidence in this regard.
Moreover, the dividend to the shareholders has not been paid to the shareholders in last three years, which is another great matter of concern.
The experts point out a number of other concerns which strongly suggest the appointment of a new face from outside the UT as the new MD.
Initially the top post of the bank was the Chief Executive Officer, and the CEO would yield powers of both Chairman and MD.
However, when Parvez Ahmad was sacked by the Governor’s administration in June 2019 on alleged charges of corruption, nepotism and favouritism, the RBI had instructed it for splitting the post of chairman and managing director with a view to improve transparency, governance, compliance and profitability of the lender.
“If Chibber is continued as the chairman, the new MD would be professionally far more superior to Chibber, keeping in the view the eligibility criteria mentioned in the notification.
“While the position of power would rest with MD, but the chairman would be the head of the board of directors, and that might bring in a conflict of interest,” the experts believe.
The Supreme Court directions also provide for constant reshuffling of officers at the senior positions in the bank, which has not been conformed to, in the Jammu and Kashmir Bank for long now.

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