It has emerged that all the 20 PSBs, including PNB, do not have a workman or an officer director on its board, a mandatory practice as per the Bank Nationalisation Act.
Even as banks are under the lens for compliance, it has emerged that all the 20 public sector banks including, Punjab National Bank (PNB), do not have a workman or an officer director on its board, a mandatory practice as per the Bank Nationalisation Act.
The post, which acts as a ‘watchdog’ on the Board and management decisions, has been lying vacant for at least last six months.
A workmen/officer director is a representative of the employees or the Unions to act as vigilantes or watchdogs to raise questions within the board on decisions that they find are not in the best interest of the bank, point at the government’s indecision on this front.
PNB’s workman director’s term ended in March 2016 and the post has been lying vacant since then.
As per the requirement, the central government may nominate any employee of a nationalised bank, who is a workman, to be a director of that bank.
“As per the Nationalisation Act, there must be a workman director on the Board for a three-year term. None of the 20 PSBs have a workman and an officer director as of now and there has not been a single appointment of these directors over the last three years. By not appointing them, the watchdogs have been removed from the system,” said CH Venkatachalam, general secretary, All-India Bank Employees’ Association (AIBEA).
Venkatachalam said he has raised this issue in at least three letters to the Finance Minister as well as one to the Prime Minister seeking intervention to make an appointment but none have got a response.
“We learn that all other formalities have also been completed but yet the appointments are withheld by the government,” he has pointed out in the letter.
This comes to light in the wake of the big banking scam of Rs 11,400 crore that hit Punjab National Bank which alleged in a letter to the stock exchanges that two of its bank officials were involved in issuing fraudulent Letter of Undertakings (LoUs) to diamond and jewellery importer Nirav Modi to seek loans beyond his means.
Questions are being raised over the lapses in the systems and processes followed by not just PNB but also other public sector banks, both during the approval of credit to an entity and also during subsequent audit and checks.
The bank unions have also flagged concerns in the case saying, “Attempts are being made to dilute the magnitude of the fraud as one bank one branch two employees fraud. Such huge frauds cannot be committed in a simple way that a branch official would give LoU for Rs 11,400 crore in a period of 6 or 7 years without no one knowing about it… It is very strange that EDs, MDs, CEOs, Chairman, Directors of the Banks are not covered by any Disciplinary and Conduct Regulations though they take very vital decisions.”
The Bank Nationalisation Act/Banking Companies (Acquisition and Transfer of Undertakings) Act provides for appointment of a workman employee representative and an officer employee representative as directors on the boards of all public sector banks.
According to a bank official, previously, workman/officer directors have raised red flags in the board meetings over lending and banking practices not meeting the required standards and it has been taken up by the Boards.”
For the past two years and more, the posts of Employee Representative Director and Officer Representative Director are not being filled up by the government.
AIBEA’s data shows that the position of an employee director in Canara Bank has been lying vacant since April 2014. Three other banks — Corporation Bank, Punjab & Sind Bank and Union Bank of India – have also not had a workman director since 2014.
At least 11 banks have such positions vacant since June 2016.
The union head says that not having such directors on the board also leads to gaps in the governance which is not watched over by any external member. Such directors are required to further point out this kind of a lacunae in the banks.
The letter to the Prime Minister states that, “While the Government under your leadership claims of good governance, quicker decisions, faster response, less bureaucratic, etc…It is a matter of concern that the posts of workman and officer directors in the banks that have fallen vacant from 2014, 2015 and 2016 still remain vacant with the result that there is no representation on the boards of all the banks representing the employees and officers.”
Venkatachalam says this is illegal and plans to file a PIL (public interest litigation) after consulting some lawyers. The promise of good governance is not enough, there needs to be some action, he adds.
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Venkatachalam says this is illegal and plans to file a PIL (public interest litigation) after consulting some lawyers. The promise of good governance is not enough, there needs to be some action, he adds.
We have taken all measures to ensure that the information provided in this article and on our social media platform is credible, verified and sourced from other Big media Houses. For any feedback or complaint, reach out to us at businessleaguein@gmail.com
