Haseeb Drabu on Friday resigned as chairman of Jammu & Kashmir Bank, a year before his term was scheduled to end. Appointed by the earlier PDP-Congress coalition government, Drabu was asked to resign by the state government.
“I was informed by the state finance secretary yesterday (of the government’s decision),” Drabu said in a telephone interview. “I didn’t ask for a reason, nor was I told. I wouldn’t like to speculate on all this. I have had a good innings of five years.”
An economist by vocation, Drabu took over as chairman of the Srinagar–based bank in June 2005 and his tenure was to end in September next year. Drabu had offered to resign when the Omar Abdullah-led government assumed power in the state in January last year, but was asked to continue. However, his resignation as the state economic advisor was accepted.
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During his tenure, J&K Bank more than doubled its profits to Rs 512 crore in the year ended March 2010 from Rs 177 core in the year ended March 2006, as also its net interest income to Rs 1,119 crore. The bank’s bad debts fell significantly to 0.28 per cent in the same period from 0.92 per cent in the year to March 2006 (see table).
Bankers expressed surprise at the manner in which Drabu was asked to quit. “It looks very odd for a banker who has grown the bank in a very systematic way and ensured sound financial health (to be asked to leave like this),” said the chairman of a state-run bank, declining to be identified. “What right does the state government has to ask him to leave like this?’’
No one was named to succeed Drabu. The state government, in consultation with the Reserve Bank of India, will make interim arrangements till a successor is found, the J&K Bank said on its website. The bank’s profitability will not be allowed to suffer, it added. The bank has two executive directors and eight presidents to manage the different functions of the bank, said the website.
It also mentions having seen tremendous growth for the past five years and a profit of more than Rs 500 crore in the last financial year. The proportion of non-performing assets to the total is the lowest among all banks in the country. Business had tripled during Drabu’s tenure and the bank was aiming at Rs 1,000 crore profit by the next financial year.
The confidence in the bank can also gauged from the fact that foreign institutional investors own 29 per cent in it. Its share price fell seven per cent today to Rs 789 in Mumbai trading, on news of Drabu’s resignation.
“Drabu ran the bank professionally and was perceived to be politically correct,” said the chairman of a state-run bank in Mumbai. “At least in the public domain, there was no information about him having issues with the administration in the state.”
Politics did him in?
Political sources in Jammu & Kashmir said Drabu fell victim to the crossfire between Omar Abdullah’s ruling National Conference and the main opposition party, Mehbooba Mufti’s PDP. A few days earlier, the PDP held a press conference in Srinagar to allege that the government has got a Rs 500 crore kickback from construction of the Rattle power project in the Jammu region. The NC vehemently denied this charge.
The Rattle project is a 690 Mw one, being constructed on the Chenab river in Kishtwar district of Jammu, at a cost of Rs 5,000 crore.
Drabu was also, as mentioned earlier, economic adviser to the state government under two chief ministers, Mufti Mohammad Sayeed and Ghulam Nabi Azad, when the Congress-PDP alliance was in power. In administrative circles, the eminent economist is seen as an appointee of PDP’s Mufti Sayeed.
“The J&K Bank chairman position has always been a political position. So, the recent happenings in J&K would clearly have played a part in the decision,” the chief of a private sector bank said.
