Patil Summons Dena Bank Chief To Discuss Dismissal

In what could be the first ouster of the chairman and managing director of a public sector bank, the minister of state for finance, Balasaheb Vikhe Patil, has called Dena Bank chairman A G Joshi to hear his response to the proposal to remove him.

Dena Bank, which posted a loss of Rs 268 crore during the last fiscal ended March, 2001 has earned the dubious distinction of being classified as a C-category bank. Indian Bank is the only other bank to have the same Reserve Bank of India (RBI) classification which would also mean that the bank loses autonomy.

The proposal to remove Joshi was mooted by the banking division in the finance ministry in late June, and is said to have received the approval of finance secretary Ajit Kumar.

The banking division intervened in March this year when it convened a special review meeting of the board which included the RBI and the government nominees.

Sources said that the board expressed concern over the deteriorating performance of the bank. Joshi is said to have stated that the bank would make a net loss of around Rs 100 crore.

The final result, however, show a net loss of Rs 268 crore, which included an outgo of Rs 107 crore for this year on account of nearly 4,000 employees opting for the voluntary retirement scheme. The entire VRS expense, which is to be amortised over a five year period, is estimated at Rs 450 crore.

Banking division officials said that the bank has fresh NPAs to the tune of Rs 900 crore during the previous fiscal for which a provisioning of Rs 335 crore has been made.

The bank's capital adequacy ratio has also slumped to 9 per cent from during 2000-01, compared to the previous year's level of 11.63 per cent, while the RBI has prescribed a capital adequacy ratio of 9 per cent.

Net NPAs as a percentage of net advances shot up from 13.4 per cent in 1999-2000 to 18.4 per cent last year. During the one-time-settlement scheme, introduced by RBI, Dena Bank is said to have recovered just over Rs 10 crore.

Sources said that banking division then sent a proposal to remove Joshi as chairman on June 23. Patil has now convened a meeting on July 12 where secretary banking Devi Dayal, RBI deputy governor Muniappan, an executive director with the central bank apart from Dena Bank chief Joshi and executive director S C Vohra, who joined the bank in December last year have been called.