The Reserve Bank June 10 approved the appointment of R K Chhibber as interim CMD of Jammu and Kashmir Bank following the removal of Parvez Ahmed from the post by the state government.
Ahmed was removed by the state government on alleged charges of corruption, nepotism and favouritism. He was appointed as chairman and CEO of J&K Bank in October 2016 and his tenure was to end in a few months.
The bank in a regulatory filing said the state government is taking a host of steps including splitting the post of chairman and managing director with a view to improve transparency, governance, compliance and profitability of the lender.
"Decision regarding cessation of directorship of Parvez Ahmed and subsequent appointment of R K Chhibber as chairman cum managing director of the bank was taken by the J&K state government and conveyed to the bank on June 8, 2019," the bank said.
The Reserve Bank of India (RBI) has approved the appointment of R K Chhibber as interim chairman cum managing director of the bank for a period of three months with effect from June 10, 2019, it said.
The bank, in an investor/analyst call, said that investigations against Ahmed were ordered by the state government on the basis of complaints of alleged malpractices and governance issues.
On the initiatives to improve governance, the bank said the state government has decided to spilt the post of chairman and managing director in compliance with the RBI and Sebi guidelines.
It has also been decided to adopt "best practices" in the corporate sector with regard to delegation of powers to the chairman, the managing director and the board for ensuring that the functioning of the bank is absolutely in-sync with what the investors would desire.
The other initiatives include strengthening the preventive vigilance mechanism in the bank so that emerging issues are addressed in real-time basis.
Implementation and adoption of regulatory guidelines as applicable to bring in accountability and overall improvement in the functioning of the bank for improving the transparency levels in the bank are among the other steps to be taken.
The bank said there is "assurance to the investors that the steps being taken are basically intended to make the bank even better. There would be no adverse financial implications of the investigations on the Bank."
Chhibber, the executive president of the bank, takes over as the interim chairman and managing director for a period of three months with effect from June 10, 2019, J&K Bank said.
Ahmed's removal is part of action taken by Anti Corruption Bureau, which was established a few months ago in the state.
On Saturday, the bank said subject to approval of the RBI, the board has appointed Chhibber as the interim CMD with effect from June 8, 2019.
"Consequent to this Parvez Ahmed ceases to be director and chairman/CEO of the bank from June, 8 2019," the bank said last week.
Chhibber, along with management team of the bank, is holding a conference call with investors of the bank on Monday about the steps to be taken for improving the profitability of the bank.
The Jammu & Kashmir government holds 59 per cent stake in J&K Bank.
The bank reported 129 per cent growth in net profit for 2018-19 fiscal at Rs 465 crore as against Rs 202 crore in the previous fiscal.
In 2018-19, bank's total business was of Rs 1.62 lakh crore, comprising deposits of Rs 89,638 crore and gross advances of Rs 72,226 crore. The business was up 14 per cent from Rs 1.42 lakh crore a year ago.
Gross and net non-performing assets (NPAs) stood at 8.97 per cent and 4.89 per cent respectively at March-end 2019, compared to 9.96 per cent and 4.90 per cent a year ago.
Stock of the bank closed down by 12.53 per cent at Rs 52 on the BSE.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
