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| JK Bank violated Securities and Exchange Board of India’s guidelines, past audits come under scanner | | Through rules to wind, Bank appointed non-independent Director as Chairman Audit committee | | Early Times Report
Jammu, Nov 2: Jammu and Kashmir Bank for the past five years violated the guidelines issued by the Securities and Exchange Board of India (SEBI) in accordance to which Chairman of the Audit Committee in the bank shall be an independent Director. However, in violation of the provisions, the Chairman of the Audit Committee for the years 2013-14, 2014-15, and 2016-17 was a non-independent Director. This has put a big question mark on the authenticity of the audits conducted with the bank from 2013 to the end of the financial year 2017.
A Company includes various stakeholders viz. investors, shareholders, customers, employees, vendor partners, government, and society. Its objective is not confined to maximizing the shareholder value but should be responsible to all stakeholders. Its governance should be fair and transparent to all stakeholders in all its transactions. J&K Bank is a listed entity on the major stock exchanges – National Stock Exchange and Bombay Stock Exchange. For a Company to be listed on the stock exchange, it has to sign an agreement which is known as a Listing Agreement, the main purpose of the agreement is to ensure that companies are following good corporate governance. The essence of good corporate governance is derived from Clause 49 of Listing Agreement, SEBI (Listing Obligations and Disclosures Requirements) Regulations 2015 (LO&DR) on Corporate Governance. It was observed that the Bank deviated from the criterion in terms of Clause 49 of Listing Agreement and Regulation 17 of SEBI (LO&DR) Regulations 2015, where the Chairman of the Board of Directors (BODs) is an executive Director, at least half of the Board should comprise of independent Directors. However, the Bank did not have the required number of Independent Directors on the Board during 2013-14, 2014-15, and 2016-17. Section 20(1)(b)(i) &(ii) of the Banking Regulation Act, 1949 prohibits the banking Company to grant any loan or advance to or on behalf of any of its Directors or any firm in which any of its Directors is interested as a partner, manager, employee or guarantor. Further, as per Regulation 16(1)(b)(vi)(E), an independent Director is one who is not a material supplier, service provider, or customer, or a lessor or lessee of the listed entity.
The Board of Directors in its meeting dated 10 August 2016, upon the recommendations of the Nomination Committee of the Board based on its due diligence, appointed Mr. Mohammad Ashraf Mir as independent Director of the Bank to fill up the casual vacancy caused due to the resignation of two Directors.
Consequently, the shareholders of the Bank in their meeting held on 17 June 2017 appointed him as independent Director on the Board of the Bank for a period of two years i.e. up to 16 June 2019. Furthermore, the Board recommended in June 2019 his re-appointment for a further period of two years as independent Director.
The Bank appointed Mr. Mir as an Independent Director on the Board despite the fact that he was availing fund-based credit facilities from the Bank during the period between August 2016 and June 2019. This was in violation of provisions of the Banking Regulation Act, 1949 and SEBI Regulations of 2015. |
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