Letters: Direct action

On November 24, the Central Bureau of Investigation arrested the CEO of LIC Housing Finance along with a few senior executives of prominent public sector banks. But when on a TV news channel, a correspondent contacted the Central Bank of India chairman, Mr Sridhar, the latter stated that the arrested person was not the bank’s employee but an outsider and the bank had nothing to do with the fraud. He, however, agreed that the arrested person, Maninder Singh Johar, was a director of Central Bank of India.

That a director is not an employee is correct, but he is much more than an employee. Directors are part and parcel of an organisation’s management and have a greater responsibility than regular employees. So the involvement of a bank director in fraud is more serious than the involvement of a bank official.

Bank directors are nominated by the central government and the Reserve Bank of India to work as watchdogs inside the bank administration. But, often, stooges of the political parties are nominated to the board of public sector banks. These directors work as middlemen for their banks’ corporate clients, sanctioning loans at cheap interest rates and earning commissions from corporate borrowers.

Most politically-backed nominated directors are mere financial brokers, and politicians ensure that everything gets swept under the carpet even as banks lose crores of rupees due to these directors. On the other hand, ordinary bank managers are blamed even for small losses.

P Gopala Krishna Acharya, Hyderabad