Why 2018 was ‘a year of exits’ in the banking sector
New Delhi, Dec 29: First, loans went kaput and borrowers left the country after defaulting on payments or committing frauds; then, high-profile bankers were forced to leave and even the top central banker quit in the end. 2018 was indeed a 'year of exits' for the banking sector.
The year 2018 began with lid being taken off from the country's biggest ever banking fraud. Billionaire diamantaire Nirav Modi and his uncle Mehul Choksi, in connivance with certain bank officials, allegedly cheated state-run Punjab National Bank of about Rs 14,000 crore through issuance of fraudulent letters of undertaking.
A Mumbai branch of PNB had fraudulently issued LoUs to a group of companies belonging to Modi since March 2011 and there were hundreds of such LoUs. The magnitude of the scam shook the entire banking system and PNB is still trying to overcome this.
As intricacies of the Nirav Modi scam were still unfolding, a whistle-blower in March raised the issue of impropriety against Chanda Kochhar, the then managing director of the country's largest private lender ICICI Bank Ltd.
The 56-year-old Kochhar, who rose through the ranks to occupy the corner office of the bank, was mired in allegations of conflicts of interest, lack of disclosures and quid-pro-quo while extending loans to the now-bankrupt Videocon Industries.
Subsequently, another complaint was filed against her and she had to eventually to say goodbye in October to the bank which she had joined as a management trainee in 1984. As regulatory and internal probes continued, the bank and Kochhar denied any wrongdoing.
Shikha Sharma's exit
Another high-profile banker Shikha Sharma was denied extension by the Reserve Bank of India as managing director of Axis Bank, the third largest private sector lender. The bank's board had proposed another three-year term for her till May 2021, but she was allowed to serve only till Dec. 31, 2018.
Another exit story continues to play out at Yes Bank, where Rana Kapoor's tenure as chief executive officer has been curtailed by the RBI and he has been allowed to occupy the position only till Jan. 31, 2019. The lender also saw Ashok Chawla quitting as its chairman last month.
Patel out, Das in
The biggest of the exits, however, took place at the RBI itself with Governor Urjit Patel announcing his sudden resignation with immediate effect on Dec. 10 citing "personal reasons". The resignation followed a run-in with the government over several issues including autonomy of the central bank. The very next day, the government appointed former bureaucrat Shaktikanta Das as the new RBI chief.
OneIndia News (with PTI inputs)