Shares Of J&K Bank Tumble On Removal Of Chairman
Shares of The Jammu & Kashmir Bank Ltd. fell the most in more than four years after the state government removed Parvez Ahmed as chairman and managing director of the lender.
While the bank’s press statement didn’t disclose any reason for the removal, the interim chairman and managing director RK Chibber in a conference call today said the government took the initiative on complaints received regarding malpractices at the lender and to improve its profitability.
Key Concall Takeways
- Move aimed at promoting higher transparency at the bank.
- Have decided to implement preventive vigilance at the bank.
- Have decided to strengthen the accountability mechanism.
- Have decided to split the post of chairman and managing director.
The government of Jammu & Kashmir, which holds 59.23 percent stake in the lender, on Saturday removed Ahmed from his post under Article 69 (iii) of Articles of Association of the Jammu & Kashmir Bank. Soon after that, the state’s vigilance officials raided the bank’s headquarters, the PTI reported. The organisation was looking for records of nearly 1,200 appointments allegedly made at the behest of political masters of the previous Peoples Democratic Party-Bharatiya Janata Party government in the state and during Ahmed’s tenure, the report said quoting officials it didn’t name.
But this is not the first such instance with the bank. In the second quarter of 2010-11, Haseeb Drabu was removed as chairman and chief executive officer. Drabu held the position since June 2005.
Financials Under Ahmed
Ahmed served as chairman of the bank from Oct. 6, 2016. Since then, the bank returned to profitability and its core income rose. Its gross bad loans fell, and provision coverage ratio improved.
On the first day of trading after Ahmed’s removal, shares of the bank tumbled as much as 20 percent but pared some of the losses to close nearly 13 percent lower. That compares with a 1.53 percent loss in the benchmark Nifty PSU Bank Index.