CVC asks RBI for factual report about granting licence to High Mark

Following a complaint by a former chief executive of High Mark, the Vigilance Commission asked RBI for a factual report on granting licence to the credit bureau

The Central Vigilance Commission (CVC) has sought a factual report from the chief vigilance officer (CVO) of Reserve Bank of India (RBI) in granting licence to troubled and cash strapped High Mark Credit Information Services Pvt Ltd (High Mark).


This follows a complaint from Ajay Kohli, former chief executive of High Mark, who earlier tried to raise the issue of violation of Credit Information Companies Regulations (CICR) Act, 2005 (CICRA) as well as Companies Act, while appointing Prof Dr Anil Pandya as executive chairman of the credit bureau.


The issue was first raised by Siddharth Das, former chief operating officer (COO) of High Mark, before the company board. But the High Mark board apparently ignored it. Subsequently, Das sent a legal notice raising this issue.


According the complaint filed by Kohli to the CVC, Dr Pandya, a US citizen promoted High Mark while being a full time professor employed at that time with North Eastern Illinois University at Chicago.


"He (Dr Pandya) did not bring any significant equity (his cash contribution to the equity capital of high mark is only Rs10 lakh) or any expertise in management of credit information bureaus, yet he was granted a license by the RBI. It is to be noted that large domestic or global corporations with relevant experience promoted the other three bureaus while Dr Pandya had no prior experience in managing a business let alone a credit information bureau," Kohli said in his complaint.


Dr Pandya has an employment contract with High Mark under which he was to devote his full time for the services of the company and was paid a salary of Rs60 lakh per annum. "However," Kohli said, "over and above this, he was also entitled to a huge sum of money (Rs12.5 million or about $230,000) towards 'procurement of the in–principle license from RBI' (clause 4(b). Further payment of Rs30.25 million (around $560,000) was also made to him under clause 4(c)."


"It is evident that payment of this huge sum of money was directly or indirectly towards 'costs' of procuring the license which means that either the license has been procured by Dr Pandya through corrupt means or he has siphoned off this money from High Mark under the pretext that this money was needed to be paid to someone. In either case, he is guilty of corrupt and criminal offences," Kohli alleged in his letter.


According to the former chief executive of High Mark, since the reputation of the RBI was at stake, he think it was imperative that the CVC immediately investigate as to why this payment was made for acquiring a license from the RBI which is done in the normal course of business if the applicant is eligible?


"Who were the real beneficiaries and whether there has been any irregularity in grant of this license to High mark. This is also a matter of concern as the funds belong to the shareholders of High Mark who are public sector banks, including State Bank of India (SBI), Punjab National Bank (PNB) and SIDBI," Kohli asks.


High Mark never appointed Prof Pandya on a full-time basis. The prefix ‘Executive’ before chairman was supposed to give the impression that he is a full-time employee in the nature of a CEO. Even as Dr Pandya continued to work on a part-time basis, the credit bureau also did not appoint any whole-time director or managing director. This clearly violates Regulation 9 (2) of the CICRA for which the board should be made responsible.


On 4 October 2012, High Mark’s former COO, Siddharth Das, sent a legal notice to the company demanding his dues. He also alleged serious violation of the CICR Act in the appointment of Prof Pandya as executive chairman.


Following the notice, Kohli, High Mark’s the then chief executive sent an email on 18 December 2012 to the company’s board of directors urging to deliberate in the alleged violation of CICR Act and Companies Act. “It is evident that Prof Dr Pandya was never appointed on a whole-time basis and continues to work on a part-time basis. As the company does not have any other whole-time director or managing director, regulation 9(2) seems to have been clearly violated. Das has already threatened to take this issue to Court as well as the RBI. Even if he does not, I feel it is my professional and moral duty to point out the illegality being committed by the Company to the Board for appropriate action to remedy the violations,” Kohli said in his email to the Board.

He said, “…there are only two options to cure the illegality for the future. Either Prof Dr Pandya should resign from the position of Executive Director or the Board should appoint a whole time director. This needs to be done as soon as possible. Otherwise, the RBI License would be under threat of cancellation/suspension. Legal advice should be sought as to the action to be taken for the past non-compliance.”


As per Regulation 9(5), the Reserve Bank of India (RBI) can supersede the company board for failing to follow Regulation 9(2) and also may cancel or suspend licence of High Mark. But so far nothing of this sort has happened.


One of the independent directors of High Mark was Vepa Kamesam, a former deputy governor of the RBI. In December 2012, he resigned from the High Mark board. Mr Kamesam was one of the four directors who along with Dr Pandya received 70% of the employee stock ownership plan (ESOP). Mr Kamesam was allotted 1.63 lakh shares in the credit bureau as ESOPs.



Anil Pandya

4 years ago

Wow... at last a reply from Dr Pandya. Sorry guys... I did it on purpose so that it catches your eyeballs. Guys like Dr Pandya never come out in such forums.

There is no moral in this leader and company. Another example of how stupid NRI's bites the dust. I browsed through their site and found that this guy (Pandya) was cheating right royally under RBI. What is RBI gonna do? Now he is planning to sell HighMark. Does he contributed anything in building it? Seeing the trail of articles in moneylife, I don't think so. It could very well have been the case of corporate cheating. Does he have the guts to reply to this article? Is he male enough to come out in open and explain what happened? Or is he like a coward gay who sleeps in the cozy bed of money he made thru this illegal corporate activity.

Also, I want to ask RBI why do they allow such people to have license in first place. If the license was granted looking at the team of people then, the team of people is what makes the company. When the key people leave then let the company close and that would be a lesson to such rats like Pandya. Sorry... I don't know how he got his DR title but I don't think he deserves it.

Alas... who knows... RBI may come up with some legally cornered logic of how everything is fine and once again a stupid NRI will be allowed to loot the money from India and walk away. Moreover, I was aghast on seeing the board of director names. Are they really doing anything or just enjoying their free booze and dinner?

Lastly, Mr. Experian and Mr. Crif - Atleast you have bigger brands and doesn't want to get associated with such filthy stuff. What happened? Let this company die. You can as well get this business much more cheaply. Are your investment bankers out of mind to buy this shit?

S Santhanam

4 years ago

Resignation of Mr Pandya is not a solution. Investigation on the trail of money should be done and action taken against him and Mr Vepa Kamesan if charges proved as latter also appeared to be in the know of things in the company. As ex senior executive of RBI, he should have conducted himself in a manner befitting the reputation of RBI and ensured that the affairs of the company were done properly.


nagesh kini

In Reply to S Santhanam 4 years ago

Irrespective of the status of the personality involved even the highest in the RBI to whom the needle of suspicion points out must be put under the scanner.
This comment may please be sent across to RBI CVC Kaza Sudhakar.

nagesh kini

4 years ago

Too bad. It stinks to high heavens!
The payment of the so-called "charges" on account of procurement of licences absolutely smacks of corruption a la Niira Radia!!
That big wigs and PSU banks allowed it to happen raises serious doubts on credibility and the eligibility of the appointee and is indeed a fit case for the RBI CVC to look into. The facts and circumstances are crystal clear. It has to convey the message that such malpractices are a strict NO-NO.

nagesh kini

4 years ago

Too bad. It stinks to high heavens!
The payment of the so-called "charges" on account of procurement of licences absolutely smacks of corruption a la Niira Radia!!
That big wigs and PSU banks allowed it to happen raises serious doubts on credibility and the eligibility of the appointee and is indeed a fit case for the RBI CVC to look into. The facts and circumstances are crystal clear. It has to convey the message that such malpractices are a strict NO-NO.

Should we cry for onions or take hoarders and intermediaries to task?

This week the Independence Day celebrations did not start off well; we had the problems in the border; our submarine sank; the only heartening news-Navy getting the Arihant and launching the Vikrant; the humble onions and soaring vegetable prices made the common man truly cry

The nation's teeming Indians, 1.2 billion of them, spent a happy holiday, a paid holiday at that, on 15th August, to celebrate the Independence Day.  That was in public and for international audience to see smiling faces on the TV screens. However, we kept the children, the future citizens, away from realities of life.


At home they shed tears crying in shame all because the government has either no means to or does not want to take to task the hoarders, black-marketers, intermediaries and traders who would act in such a despicable manner to increase the sale price of agricultural produce, such as onions, potatoes and the rest, making them beyond the means of the aam aadmi.


Unfortunately, the plans for celebrating the great day did not start well. For one thing, although there was a lot of talk and proud moments for the Indian Navy when it launched the aircraft carrier INS Vikrant, couple of days earlier, the midnight explosion, which lit the Mumbai sky, resulted in the loss of life of 18 brave hearts and the submarine INS Sindhurakshak. The investigation and probe is on as how this could have happened, right in the Mumbai dry docks and the speculation about sabotage to chemical leak rented the air.


To appease the agitated Indian public, and to show great concern for the aam aadmi, the government announced measures that would relax the quarantine rules to permit imported onions from both China and Egypt.  This will still take some 45/60 days before the onions can actually arrive and be in the Indian market.  Readers may be aware that Chinese garlic and apples are already in the market, successfully competing against the indigenous farm produce.


This has been possible due to lack of adequate checks and measures against the intermediaries who act as a giant octopus choking the farmer and the consumer.


As if this Chinese onslaught is not enough in the farm front, the government is even considering the import of onions from Pakistan.  What more can you ask?


It was Hindi-Chini bhai-bhai at one time.  Now is the Chini-Paki bhai-bhai that is saying bye-bye to Indian farm produce?


As for the onions, which can be cultivated throughout the year, the Indian production during 2012-13 has been estimated at 17 million tonnes against an overall consumption pattern of about 22 million tonnes.  This shortfall may now be covered by imports by private and public sector undertaking, such as the NAFED.  Exports of some varieties of onions continue due to lack of domestic demand.


The three main producers in the country are Maharashtra, Karnataka and Madhya Pradesh.  Local varieties are grown almost everywhere and the total output has risen from 12 MT in 2009-10 to 17 MT by 2012-13 with increasing domestic consumption.  Exports to middle-east and far-east have been going on for decades now, with price controls from time to time.


Despite the increase in production, this year, the price has gone up to dizzy heights at Rs80 per kilo (against Rs15-Rs20 in the past), making it too high a price for the aam aadmi to pay.


Speculation, hoarding by wholesalers have caused this enormous increase.


Since the new crop is expected in September-October period, it does not make any sense to obtain oversee supplies from China, Pakistan or even Egypt, because by the time these arrive, the indigenous supplies would be in the market, unless, of course, the traders play their tricks with impunity.


The point at stake is should the Indians buy these onions from China and Pakistan or take strict direct action against the domestic miscreants who have caused this phenomenal price rise?


Why not apply the Gandhian policy of boycott of the market produce simply by refusing to buy until the price is brought down to realistic levels?  The farmer, in true sense, does not even get Rs15/20 for a kilo and the butter, cream and jam is taken away by the intermediaries.


This can only stop when the government shows the will and takes punitive action against the speculators.  It is time they did.


(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)




4 years ago

Has any punitive action given the desired results so far? Rather the slow policy or late action by the government has put pressure on the public. There appears to be no policy for increasing production of food products. It is time that strict action is taken against the hoarders, farmers provided good quality seeds and inputs. The private sector should be allowed to invest in farming.

The sweeping presidential power to help US prisoners

President Obama has the power to shorten the sentence of federal prisoners. But he has only used it once

This week, Attorney General Eric Holder spoke out against the impacts of “draconian” sentences for nonviolent drug offenders. “Too many Americans go to too many prisons for far too long, and for no truly good law enforcement reason,” said Holder.

But in unveiling the new “smart on crime” initiative, Holder skipped mention of the sweeping power the president has to shorten or forgive a federal prisoner’s sentence.

President Obama has given just one person early release from prison. As ProPublica has documented, Obama has overall granted clemency at a lower rate than any modern president, which includes both commutations – early release – and pardons. Last year, ProPublica reported that the Justice Department’s Office of the Pardon Attorney rarely gives positive clemency recommendations to the president. Experts have been calling for reform of the entire clemency process.

“Holder’s speech begs the question, why is not more attention given to the broken pardons office?” said Robert Ehrlich, a former Republican governor of Maryland who recently started a law clinic devoted to pardons.

One person who is still waiting to hear about his petition for commutation is Clarence Aaron. He has been in prison since 1993, when he was sentenced to three life terms for his role in a drug deal. Aaron was not the buyer, seller, nor supplier of the drugs. It was his first criminal offense.

The White House ordered a fresh review of Aaron’s petition last year after ProPublica found that the pardon attorney, Ronald Rodgers, had misrepresented Aaron’s case when it was brought to President George W. Bush. An Inspector General’s report released in December supported ProPublica’s findings, and referred the incident to the Deputy Attorney General to determine if “administrative action is appropriate.”

Nine months later, Justice Department spokesman Wyn Hornbuckle says the “issues raised in the report are still being examined.”

In his speech, Holder expressed concern about racial disparities in sentencing and treatment of prisoners. In 2011, a ProPublica investigation found that whites were four times as likely to receive pardons as minorities. Following our story, the Justice Department commissioned a study on racial disparities in pardons. Hornbuckle says that study is “ongoing.”

“The clemency process will need to be invigorated both from the bottom up and the top down,” said Jeffrey Crouch, a professor at American University, who wrote a book on pardons. “One step is the pardon attorney giving applicants a fair review and a positive recommendation. The other step is President Obama being more willing to use his pardon power.”

For now, Holder’s initiative has little to offer prisoners already behind bars. He directed prosecutors to avoid charges that carried mandatory minimum sentences for certain low-level, nonviolent drug offenders and urged the passage of legislation to change those sentencing requirements. But in 2010, there were more than 75,000 people in federal custody that had been given mandatory sentences.

“We’ve been getting a lot of calls asking, does this mean my loved one gets to go home?” said Molly Gill, government affairs counsel at Families Against Mandatory Minimums. “For the vast majority of people it doesn’t change their sentences and it isn’t retroactive.” (Holder did expand “compassionate release” for some elderly prisoners.)

While clemency does not generally reach wide swaths of prisoners, Presidents Gerald Ford and Jimmy Carter used it to affect policy on a larger scale, creating programs to forgive thousands of Vietnam War draft evaders.

In the 1960s, Attorney General Robert F. Kennedy also took a stand against what he described as “grossly unjust” outcomes of sentencing practices – and used commutations to do so. He directed federal prison wardens to seek out and bring him prisoners deserving of early release. Kennedy acknowledged that presidential commutations were “at best only stop-gaps” in a sentencing regime that needed reform. President John F. Kennedy commuted 100 sentences in total, and President Lyndon B. Johnson 226.

Mark Osler, a law professor at St. Thomas University who runs a clinic on commutations, said Obama could also do more. “Holder’s emphasis on how wrong these laws have been, and how damaging the Justice Department’s enforcement of those laws has been, gives me hope that this only the first step,” Osler said.



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