Shakti Sinha

Clouds Continue to Gather Around Lakshmi Vilas Bank as Shareholders Vote Out the CEO

With uncertainty looming though, depositors are a worried lot. Somewhere along, they need to be assured. Who else can do it better but the RBI?

It has now been a year since the Reserve Bank of India (RBI) initiated prompt corrective action (PCA) against Lakshmi Vilas Bank.

But uncertainty has continued to linger at the private sector lender, with matters worsening this past week. The banking regulator cannot afford to allow things to linger on to resolve themselves. It is time the RBI stepped in, and cleared the cobwebs.

In the latest episode in the not-so-encouraging saga of Lakshmi Vilas Bank, the shareholders decisively threw out resolutions related to the appointment of seven directors, including surprisingly S. Sundar, who was appointed as interim Managing Director and CEO at the beginning of this year.

The annual general body meeting of the shareholders was held two days ago on September 25, with shareholders clearing resolutions related to only three directors.

The seven rejected names are: S. Sundar; N. Saiprasad (non-executive, non-independent director); Gorinka Jaganmohan Rao (non-executive, independent director); K.R. Pradeep (non-executive, non-independent director); B.K. Manjunath (non-executive, independent director); and Y.V. Lakshminarayana Murthy (non-executive, independent director).

The appointment of only three directors was cleared. They are: Shakti Sinha, Satish Kumar Kalra and Meeta Makhan.

It is a stunning blow, to say the least. Such a decisive strong reaction from the shareholders reflects the widespread no-confidence among the shareholding population against the people running the affairs of the private lender.

Losses incurred for the past 10 quarters does indeed reveal a tale of its own. For the year ended March 2020, Lakshmi Vilas Bank reported a loss of over Rs 825 crore.

Assorted factors – both business and non-business – must have compelled the RBI to put the private lender under the PCA programme in September 2019. This places, among others, curbs on its lending to corporates.

Also read: The Takeaways From RBI’s Refusal to Bless the Indiabulls-Lakshmi Vilas Bank Merger

The Bank’s total Capital Adequacy Ratio (CAR) as per Basel Ill guidelines, was at 0.17 % as at June 30, 2020 as against 1.12 % as at March 31, 2020. Net NPA stood at 9.64% as on June 30, 2020, as against the Net NPA of 8.30%, as on June 30, 2019. Net NPA was 10.04% as on March 31, 2020.

A few months ago, in July to be precise, the bank insisted in a release that “despite logistical challenges arising due to COVID-19 situation, we have made significant progress with Clix group for the proposed amalgamation of Clix Capital Service Pvt. Ltd. and Clix Finance India Pvt. Ltd. into the bank”.

It went on to add: “However, there may be slight delay in the mutual due diligence and preparation of documents for regulatory requirements due to Covid situation and travel restrictions. Hence, both the parties mutually agreed to extend the exclusivity period till 15th September 2020.”

But the shareholder action in throwing out resolutions relating to appointment of a majority of the directors has put a question mark over the discussions with the Clix group.

A worker walks past the logo of Reserve Bank of India (RBI) inside its office in New Delhi, July 8, 2019. Photo: Reuters/Anushree Fadnavis/Files

Last October, the RBI put paid to the private lender’s efforts to merge the bank with Indiabulls Housing Finance. It was widely believed that the banking regulator was not amused by the clear manoeuvring of Indiabulls to get a back-door entry into the banking space through the merger of LVB with itself. Also, Indiabulls was in the limelight at that point in time for a number of not-so-positive reasons.

A couple of months before the rejection of the merger plan by the RBI, LVB saw its managing director and CEO Pasrthasarathi Mukherjee resign citing, of all things, personal reasons. At one point, Srei Capital, too, was reportedly eying this bank.

For some time now, there has been a consistent feed of news coming out from the private lender on possible partners to co-run the bank. That perhaps has managed to send out false hopes to a host of stakeholders – from depositors to common shareholders and the like. Somewhere along, however, these hopes remained in the realm of possibility. Probably, shareholders of the minority kind have run out of patience.

Interestingly enough, institutional shareholders (who hold close to 17.5% shares) have overwhelmingly voted against the resolutions appointing these seven directors.

Also read: India’s Shadow Lobbies: How Business Captured the Government

According to stock exchange data, the promoters’ holding in the bank is in the vicinity of 7%.

No doubt, the LVB shares are widely distributed. If sources are to go by, a portion of the distributed public holding is under the influence of a few. Notwithstanding this, the shareholders managed to assert their unhappiness!

Typically, professionalism must be ruling in a largely distributed holding structure as the one that exists in LVB. And, one expects the board to be packed with lots of talent. Interestingly enough, the bank sought to fill the board positions mostly with the same set of people who had been directors in the past. Continuity is alright. If the past was bad, why insist on its continuance.

That a substantial number of the resolutions were thrown out by the shareholders gives a clue or two to the uneasiness within. Institutional holders and others have converged here. Far from viewing it as shareholder activism, the whole LVB episode must be read in a whole new context. Performance has to be the overriding new theme.

How things will unfold now that the shareholders have acted? In a statement, the bank has said that the senior management, along with the board, will run the daily affairs of the lender till a new MD is appointed. It has also sought to dispel any concerns over its liquidity situation, saying the situation is adequate.

With a host of uncertainty looming though, depositors are a worried lot. Somewhere along, they need to be assured. Who else can do it better but the RBI?

The country has seen one too many actions on the financial sector front in quick succession.

The collapse of Punjab and Maharashtra Co-operative Bank, the Yes Bank imbroglio and the IL&FS disaster are still haunting the common depositors. The LVB could become the latest cause of concern for the central bank.

K.T. Jagannathan is a senior business journalist.

Architect Raj Rewal Claims Design of Museum of Prime Ministers Is a ‘Rip-Off’

Amidst much controversy over the location of the government-backed Museum for Prime Ministers, architect Raj Rewal claimed its design is plagiarised from his design of the library block of the State University of Performing and Visual Arts in Rohtak.

New Delhi: Leading architect Raj Rewal has claimed that the design of the Museum of the Prime Ministers of India (Museum of PMs) in the Teen Murti complex is plagiarised from his design of the library block of the State University of Performing and Visual Arts in Rohtak.

According to the Indian Express, in a letter to Nehru Memorial Museum and Library director Shakti Sinha, Rewal’s company said the Ashoka Chakra on the slantng roof of proposed design is a “rip-off” of his design.

Rewal’s letter reads:

We are astonished to notice that the salient feature of the Ashoka Chakra (Dharma Chakra) on the slanting roof of the proposed design is a rip-off of the design by Mr Raj Rewal… In fact, this building is the focal point of the entire campus of 22 acres of land… The design of the campus and the library in particular had been published prominently in various architectural magazines in India and abroad, which received wide acclaim for its innovative design.

The designers of the museum, Sikka Associates Architects, called the allegation of plagiarims “baseless”.

Dharma chakra design for the Museum of PMs.

Also Read: NMML Row: Manmohan Singh Urges PM Modi Not to Eliminate Nehru’s Legacy

Raman Sikka told the Indian Express that the design was conceptualised to “represent the hands of Prime Ministers shaping a rising nation” and the Dharma Chakra from the flag is a “symbol of a rising India”. Calling the allegation of plagiarism baseless, he said the concept is unique. “One cannot break down parts of a building to find other similar parts. The building and its concept have to be seen as a whole,” he told the Indian Express.

The similarities between the two are uncanny. Rewal’s design features a central disc with photovoltaic cells to generate electricity, placed atop a sandstone perch. The incline in the disc is closely mimicked by the Sikka design.

NMML director Sinha was apparently unaware of the letter. He said the design was chosen collectively by a jury, which included an architect. “We will certainly investigate the architectural plans and ensure there is no violation of any legal norms,” he told the Indian Express.

Copies of the letter were also sent to the ministries of culture, and housing and urban affairs.

Also Read: Fractious Meeting Ensures ‘Museum for PMs’ Won’t Be at Nehru Memorial

This latest controversy comes in the wake of a contentious debate regarding the location of the Museum of PMs. After a meeting held in July, Sinha and Congress leader Jairam Ramesh got into a heated tussle over whether the museum would be built on Teen Murti grounds or not. Ramesh, along with other prominent opposition leaders, brought said nothing had been decided in the meeting since there was strong opposition to sidelining Nehru in the Teen Murti complex.

In early October, despite continued opposition from Congress, the Centre moved forward with the plan to build the museum at Teen Murti. According to the Times of India, on Monday, Union culture minister Mahesh Sharma led the ‘bhoomi poojan’ for the new museum and laid the foundation stone on the lawns.

Museum for PMs at Teen Murti Seen as Attempt by Modi Regime to ‘Obliterate’ Nehru

Proposed amendments for setting up the museum at a separate building have been passed by NMML executive council and will now come up before AGM on Thursday.

In a move seen by many, such as Jairam Ramesh of the Congress, as “diabolical” and “intended only to obliterate Jawaharlal Nehru”, the Nehru Memorial Museum and Library (NMML) will on Thursday deliberate among other things, on the addition of a separate building on its premises at Teen Murti Bhavan to house a new ‘Museum for Prime Ministers’.

Though the NMML is an autonomous institution under the Ministry of Culture and its premises belong to the Centre, its original mandate was to maintain a museum of Nehru’s memorabilia and safeguard personal objects pertaining to his life. It has also been preserving various documents, photographs and memorabilia pertaining to India’s freedom movement.

However, since the Narendra Modi government came to power, a concerted attempt has been made to dilute the institution’s mandate. The exercise began in September 2015, when the culture minister questioned the manner of appointment of the then NMML director Mahesh Rangarajan by the previous UPA government. This had prompted Rangarajan to resign.

New director had served in RSS think-tank

For a year, the post of director remained vacant, until retired IAS officer Shakti Sinha was appointed. He had served in the Prime Minister’s Office under Atal Bihari Vajpayee. Sinha had also served as the director of India Foundation, a think tank aligned to the Rashtriya Swayamsewak Sangh (RSS).

His candidature to the post evoked opposition. Executive council member Pratap Bhanu Mehta had resigned in protest, questioning Sinha’s suitability to the post. Another member, economist and former under secretary general of the United Nations, Nitin Desai, had also opposed shortlisting Sinha for the post.

Soon after Sinha took charge, the idea of creating the Museum for Prime Ministers began taking shape. Its design is now learnt to have been finalised. The issue is whether NMML should honour only Nehru or other prime ministers as well.

Museum proposed through amendments in MoA

The changes are being ushered in through amendments to the memorandum of association (MoA) of the NMML. The executive council had last year noted that the proposed amendments would largely deal with the museum’s working – by allowing upgrading of existing galleries and showcasing Nehru in a different context in each of them.

But the major change that the amendment proposed pertained to setting up a Museum for Prime Ministers. Though Congress members Mallikarjun Kharge and Karan Singh had not opposed the idea of this museum last year, the party leaders have openly criticised the move over the past few months.

Teen Murti Bhavan. Credit: Satish Somasundaram CC BY 2.0.

The executive council recently decided to amend the MoA and rules and regulation of the NMML society and also recommended that the larger society accept them in its next general meeting. The move was opposed by Jairam Ramesh, former INTACH Delhi chapter convenor and architect A.G.K. Menon and historian Nayanjyot Lahiri. The annual general meeting of the society, due on Thursday, would take the issue up.

According to an Economic Times report, Menon has excused himself from the AGM and had opposed the idea of the museum for PMs, citing heritage concerns. He had also called for a heritage assessment report before the design was finalised.

Ramesh and Kharge are now expected to vehemently oppose the move.

The news report noted that the council, while examining the issue, had considered the written views of Nitin Desai, who had said that Nehru “represents a link between the freedom struggle and early years of independence and that his contribution to our evolution as a nation is qualitatively different from that of his many successors.”

Advocating the need to reject the proposed amendments, Desai had also demanded that Nehru’s successors be commemorated in a separate institutional context. The other members had, however, supported the amendments.

Preparation for museum is at advanced stage

The proposal for the museum is already at an advanced stage since Sinha had constituted an “in-house research team” to evaluate the suggestions made by a team of consultants from Delhi University and Benaras Hindu University for the museum. The team – Chandrachur Singh, Keshav Mishra and Swadesh Singh – is learnt to have already approached families of former prime ministers for identifying the visual and textual elements that would be displayed in the museum.

Sinha told the Economic Times that the museum was being designed as a “temple of democracy” that would honour the PMs of the country. “The Prime Minister of India has always played a predominant role in shaping the future of the country. It is different from other democracies. That will be reflected in the ethos of the museum,” he said.

With much of the planning already in place, the museum may come up in about a year’s time if the proposal is passed.

‘Political Pressure’ Bad for Academics: Pratap Bhanu Mehta’s Resignation Letter from NMML

“I do not believe that the candidate the committee has recommended as its number one choice commands … respect amongst the academic community.”

A view of the Nehru Memorial Museum and Library, New delhi. Credit: NMML

On Friday, Pratap Bhanu Mehta, a member of the executive committee (EC) of the Nehru Memorial Museum and Library (NMML) resigned from his position to protest the manner in which the institution’s reputation and integrity were being compromised by attempts to foist a politically-connected bureaucrat as director.

The bureaucrat in question is Shakti Sinha, an Indian Administrative Service officer who had worked as private secretary to Atal Bihari Vajpayee when he was prime minister of the first BJP-led National Democratic Alliance government at the Centre.

The NMML is the country’s premier institution for research on modern Indian history and has so far been headed by directors who have had a reputation as scholars.

The previous director, Mahesh Rangarajan, resigned last year in the aftermath of statements by senior BJP leaders, including Union culture minister Mahesh Sharma, expressing unhappiness at the NMML’s orientation.

The Wire has learned that a decision to appoint Sinha to the job was taken as early as the third week of July 2016. Soon after, on July 22, an advertisement for the post of director was issued which tweaked the required qualifications to include “administrators” and not just eminent scholars. When the applications were scrutinised, the selection committee – headed by minister of state for external affairs M.J. Akbar – placed Sinha at the top of the list.

Rather than be party to Sinha’s appointment, Mehta, who is an eminent political scientist and heads the Centre for Policy Research in Delhi, has preferred to resign from his position on the EC.

Appended below is the full text of the letter of resignation he sent on Friday, August 11, 2016, to Lokesh Chandra, chair of the NMML executive committee.

Dear Prof. Chandra,

I write to submit my resignation as member of the Executive Committee of the Nehru Memorial Museum and Library. I was appointed to the Committee by the present government. But developments of the last few weeks lead me to conclude that NMML is heading in a direction that makes me uncomfortable.

Under such circumstances, I feel I will not be able to contribute to the institution in any meaningful way. It is therefore right that I step down.

As you are aware, I have recorded my note of dissent against the recommendations of the selection committee.

I believe the committee, in making its recommendations, has acted in deep haste, in a way that will harm the long term reputation of a distinguished institution like NMML. NMML has a wide remit, much beyond its function as a memorial and library. It is central to the world of historical scholarship, and can potentially be a great contributor to the world of ideas more generally. It is important therefore that the head of the institution be someone who commands intellectual respect.

Pratap Bhanu Mehta. Credit: cprindia.org

I do not believe that the candidate the committee has recommended as its number one choice commands such respect amongst the academic community. I am not in a position to comment on his abilities as an administrator. But nothing in the track record of this candidate leads me to believe that he can provide the kind of exemplary intellectual leadership NMML needs at this point in its history.

Appointing an administrator who does not have the requisite track record in the field of scholarship, or the world of letters more generally, sends a very bad signal about the stature of NMML as an institution. I believe that the appointment of such a person also violates the spirit in which the executive committee had revised the qualifications for the post of director.

As I had pointed out in the meeting of the selection committee, the advertisement we put out was at variance with the formulations of the executive committee. This advertisement paved the way, in a way in which we had not intended, for a pure administrator to be considered for the position. This advertisement was not approved by the executive committee.

It is the committee’s (and the government’s) prerogative to marginalise academic considerations if it so wishes. But I hope you will understand that I cannot be complicit in this marginalisation.

The committee should take into account administrative experience or demonstrated leadership skills. But sending a signal that completely marginalises issues of academic credibility, scholarly credentials, or larger contributions to the world of ideas or thinking does not befit an institution of the stature of NMML. It is the committee’s (and the government’s) prerogative to marginalise academic considerations if it so wishes. But I hope you will understand that I cannot be complicit in this marginalisation.

The advertisement that Mehta says the executive committee never approved.

As I had pointed out in the selection committee, the overall pool of applications was not worthy of an institution of such importance. That may have partly been the result of the process: a very tight deadline was given to applicants; the committee was given no time to do any outreach to potential candidates after the advertisement appeared. But I also suspect the reason the application pool was disappointing was this. There is an impression that good academics will find it very difficult to function in the institutional set up we have created, with its multiple political and administrative pressures. We can debate how this impression has been created. But we have to come to terms with the fact that we are doing everything to exacerbate the impression that leading institutions are hostile to academics of genuine accomplishment and promise. We are not even seeking them out, or persuading them to provide intellectual leadership to major institutions. This appointment will, I am afraid, exacerbate that impression.

Since I have put in a note of dissent, I do not wish to encumber my colleagues and the incoming director with my presence on the committee. It will only create more awkwardness all around. I respect the right of the committee to take the institution in whichever direction they think fit. But I hope equally that the committee will understand my reasons for resigning.

My colleagues have been wonderful, and a great source of learning. But when it is clear that the chasm between our visions of the kind of director NMML needs is so deep, it is time to bow out. I respectfully submit my resignation, and request that you forward it to the appropriate authorities. I shall, always, remain a friend of the institution and the highest ideals it should stand for.

Warmest best wishes,

Pratap Bhanu Mehta