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Two of the nine candidates recommended by the board's nomination committee would be ineligible if the 2013 guidelines issued by the department of financial services (DFS) of the ministry were applied, according to people familiar with the processes. The shareholders of the bank, other than the government, will elect the nominees in an Extraordinary General Meeting on Monday.
This comes after the finance minister wrote to the central bank for review of senior appointments and nominations in public sector banks. Officials at the bank do not deny the nominations do not conform with the guidelines. However, they say a legal opinion was taken saying the DFS guidelines are only "advisory in nature and not mandatory" and that if the nominations were turned down, the candidates would go to court.
According to the notice of candidates contesting, issued by the bank, Kanwaljit Singh Oberoi and Shabeer Pasha have been determined as 'fit and proper' by the nomination committee. Oberoi has served two terms as director in Syndicate Bank and Bank of Maharashtra; he has also completed one term as shareholder director in Corporation Bank. Pasha had completed one term as a non-official director (NOD) in Canara Bank and resigned before he completed a second term. He has also completed one term as shareholder director in Corporation Bank.
"In effect, both Oberoi and Pasha have overstayed as directors for more than two terms and are prima facie ineligible for consideration, on the basis of combined reading of the criteria laid down in the DFS Guidelines of June 2011 and its DFS advisory of September 2013," a person familiar with the process said.
The DFS guidelines state that a NOD cannot be considered for nomination if he has already been one or a shareholder director on the board of a bank or financial institution for six years, whether "continuously or intermittently". This was also made applicable for appointment of directors under the category of chartered accountants.
In response to an email seeking comments, sent by Business Standard, a senior Corporation Bank official said over the telephone: "Our nominations committee has taken the decision based on a legal opinion, which says the guidelines are advisory in nature and are not mandatory. The opinion is based on a Calcutta High Court judgment in the matter of Soumyendra Roy Choudhry vs UCO Bank in which the court has held that the DFS guidelines are not mandatory. This judgment came in November 2013. The ministry advisory came in September."
He added the panel had nominated nine candidates in all. "Candidates have to hold a minimum of 100 shares to be eligible for such nominations. Further, they need to be nominated by 100 shareholders. There are not enough people who fulfill such criteria. We got ten applications. One of these could not get the requisite 100 nominations. The other nine have been nominated. It is up to the shareholders to elect. If not nominated, these candidates would have gone to court ,leading to further legal issues," he added.
Critics say the court case was being quoted out of context as it pertained to the age limits of a shareholder director and not the terms served by a NOD.
Overstaying
* Shareholder directors of public sector banks elected by non-govt shareholders
* In June 2011, DFS prescribed guidelines for nomination of candidates for shareholder directors
* In September 2013, DFS asked banks to comply with the 2011 norms
* Norms prescribe maximum number of terms and years a person can be on PSB boards
* Two of nine nominees do not conform with norms
* Bank says DFS guideline advisory, not mandatory
