Uti Bank Board Gives Clean Chit To Nayak

The UTI Bank board today exonerated bank's chairman and managing director P J Nayak of the "indictment" in the Joint Parliamentary Committee's (JPC) draft report and asked him to join for duties immediately.

The meeting was chaired by independent director Surendra Singh and all the directors except for N C Singhal and Daniel Paul Fletcher were present in the meeting. Nayak did not attend the meeting. UTI Bank board has 11 directors including Nayak.

Nayak had proceeded on a four-week leave on July 22 in the wake of the JPC indictment of him. The draft JPC report was extremely critical of Nayak's role in the failed merger of UTI Bank and Global Trust Bank and said he "stood to gain personally from the merger and should have got a due diligence of the merger proposal conducted".

While proceeding on leave, Nayak had requested the board to conduct an inquiry into "any culpability which may attach to me" and to decide "whether it would be desirable to have a change in the bank's CMD".

"The board was associated with the merger decision right from the start. Nayak is a man of great credibility and it is very much in the interest of the bank that he joins back. The press reports of the JPC have not been substantiated," said Singh.

"The board reposed strong confidence in the credibility and integrity of Nayak as CMD and firmly believed that Nayak's continued stewardship would be in the best interest of the bank. In view of this the board resolved unanimously to request Nayak to resume forthwith his duties as CMD of the bank," a bank press release said.

SBI Caps had initially done the due diligence for the merger where the share swap deal was fixed a 2.25 :1.

However after reports had come out, UTI Bank had appointed Deloitte, Haskins & Sells to conduct a due diligence which confirmed the swap ratio.

"After the merger was approved by the board on the basis of advice of SBI caps some items had appeared in the press. The board had felt that it would be better to go in for a second valuation to look into any factors that were not looked into initially," said Singh.

The bank was in advanced talks with JP Morgan to make a preferential issue which was scheduled to have been completed in the next few weeks.

The talks are now likely to restart. The bank is planning to make a 12 to 15 per cent preferential issue to raise around Rs 200 crore of capital.