Former secretary Ashok Chawla, who has been named in a charge-sheet by Central Bureau of Investigation (CBI) in the Aircel-Maxis scam, has resigned as non-executive chairman of Yes Bank. Mr Chawla, however, continues to be chairman of the National Stock Exchange (NSE). According to Yes Bank’s disclosure to the stock exchange, Mr Chawla ostensibly resigned since he cannot devote the substantial time required from the chairman during the transition period when a new managing director is to be appointed to replace Rana Kapoor.
Mr Kapoor will step down in line with a directive from the Reserve Bank of India (RBI) which refused to extend his term. The RBI directive was made public on 17 October 2018 and Mr Kapoor will remain in the job until at least 31 January 2019. In the circumstances, Mr Chawla’s claim of having to devote substantial time to the job seem rather premature.
It also raises another important question—at a time when independent directors, especially those in powerful government positions and regulatory bodies, are commanding marquee board directorships with huge sitting fees and a commission out of the profits earned. Wouldn’t they be expected to stay with a company in good times as well as when the going gets rough and more of their time is required?
Speculation in the market is that Mr Chawla’s decision has more to do with the Aircel-Maxis case than work pressure. But that raises the issue of his continuance as chairman of the National Stock Exchange (NSE) as well.
Sources close to the Exchange say it is their understanding that RBI and the market regulator, Securities and Exchange Board of India (SEBI), have had no issues with Mr Chawla continuing as NSE chairman until the government decides whether or not to grant permission for his prosecution to the CBI.
Mr Chawla, who was finance secretary before retiring in 2011, is one of 12 individuals and six firms named in the Aircel-Maxis charge-sheet filed in July this year.
The investigation agency had filed the charge-sheet against former minister P Chidambaram, his son Karti and 16 others. This includes former Union secretary for economic affairs Ashok Kumar Jha, then additional secretary Mr Chawla (chairman of NSE), two serving IAS officers—joint secretary Kumar Sanjay Krishna and director Deepak Kumar Singh and an undersecretary Ram Sharan, and private persons A Palaniappan, Tatparanandam Krishnan, Augustus Ralph Marshal, S Bhaskaraman and V Srinivasan.
In the Yes Bank case, according to reports, last month the Bank's board had received letters questioning Mr Chawla's continuation as chairman after being named in the CBI charge-sheet.
Quoting a person with direct knowledge of the meeting, a report from Economic Times
says, "Following these letters the board asked the bank to take an advice from the RBI. The RBI was non-committal about the continuation of Mr Chawla on the board but had warned about implications if the finance ministry asks questions on his continuation."
Mr Chawla is also non-executive director of Jet Airways (India) Ltd, which is in deep financial trouble and has seen at least one independent director exit the board in the past week.
A Gujarat cadre of Indian Administrative Service (IAS), Mr Chawla has been associated with several prestigious and important institutions, including government and private.
He served as a director of State Bank of India (SBI) from 13 May 2009 to 31 January 2011. He was also director of Life Insurance Corp of India (LIC) during the same period while on the SBI board. During the same period, he was director of India Infrastructure Finance Company Ltd as well.
During his long and varied experience, Mr Chawla has held positions in various areas including finance, civil aviation, chemicals & fertilisers and other industries.
He has been the non-executive chairman at NSE since 25 April 2016 and has been public interest director of the Exchange since 28 March 2016.
Mr Chawla, who was director of RBI, also served as chairman and managing director of Indian Petrochemicals Corp Ltd (IPCL) and a director on the Oil and Natural Gas Commission (ONGC) from 5 December 2005 to 8 March 2007. Prior to that, Mr Chawla was non-executive director of National Fertilizers Ltd between 21 October 2004 to 25 April 2005.
He served as a special secretary in the department of economic affairs and secretary of civil aviation. He also served as an additional secretary and financial advisor of department of fertilizers.
Mr Chawla was managing director of several public sector units (PSUs) like Sardar Sarovar Narmada Nigam Ltd and Gujarat Industrial Investment Corp (GIIC).
For six months in 2018, he was also independent director of Reliance Nippon Life Insurance Co Ltd. He was also director of Madras Fertilizers Ltd.