Quick on the heels of the appointment of Arundhati Bhattacharya, former chairperson of State Bank of India (SBI), on the board of Reliance Industries Ltd and Wipro, the All India Public Sector and Central Government Officers' Confederation (AIPCOC) has raised important questions about the appointment of chairmen and executive directors of state-run entities, including nationalised banks, as independent directors, post their retirement. Earlier this week, Wipro Ltd also decided to appoint Ms Bhattacharya on its board as independent director from 1 January 2019.
In a release, the Confederation says, "AIPCOC strongly condemns appointment of all such former top executives of public sector banks (PSBs) as independent directors in corporate houses with which, they had business dealings during their tenure. It appears that these cases are 'quid pro quo'."
Ms Bhattacharya is not the only chief of public sector bank (PSB), who had joined corporate sector post retirement and mandatory cooling period of one year. The Confederation says, “In the past, there have been criticisms against PCD Nambiar and OP Bhatt, both former chairmen of SBI who joined corporates. We have observed that it has become a common practice for senior executives to join boards with which they had business dealing while in service and they can be in the boards of seven listed companies earning more money than what they earned while in service.”
According to AIPCOC, Ms Bhattacharya was heading SBI Capital Markets Ltd, which was involved in corporate credit before she became managing director (MD) and then chairman of SBI. "During her tenure, she was instrumental in extending national business correspondent status to Reliance though they had not performed as national business correspondent satisfactorily. During her tenure in SBI, she was party to the decision of selling stressed assets of the Bank to Reliance Asset Reconstruction Co (ARC) at 15% of the outstanding. Above all, during her tenure, SBI decided to be a partner with 30% shareholding in Reliance Payment Bank, which has started operations in April this year. Reliance Jio has been given the digital platform of SBI."
"We understand that during her tenure in the Bank, many concessions were given to Anil Ambani group's accounts, which could be a reason of the accounts not being branded as non-performing asset (NPA)," the Confederation says.
During the demonetisation period, AIPCOC claims Ms Bhattacharya 'virtually became the spokesperson of the government' and gave statement on 14 November 2016 that within 10 days everything will become normal, which did not happen.
"She gave a public statement against merger of associate banks with SBI but later went ahead with the merger, which proved to be a colossal disaster for the bank, as it suffered a humongous loss the time in its history. It is apparent that the government duly recognised her good 'deeds' and she was given one year extension as chairman, depriving other talented managing directors of the opportunity to succeed her," the Confederation says.
Earlier this month, private equity firm ChrysCapital Advisors LLP said that i hired Ms Bhattacharya as an advisor. She will advise on firm's strategy and investments, will be working with ChrysCapital managing partner Kunal Shroff and other partners, the private equity firm had said.
In a report, Times of India had said that Ms Bhattacharya, who has completed her cool-off period this month, would be joining the board of Piramal Enterprises.
AIPCOC has demanded the government to immediately review norms for appointment of retired top executives of banks on board of private companies.
"We also demand that all the loans given by these executives to corporates houses where they have joined after retirement should be investigated by the Parliament Standing Committee on Finance and come out with a comprehensive report," it added.