Doubts raised on election of Kunal Dalmia as SBBJ director
Moneylife Digital Team 06 September 2010

Shareholder complains about irregularities in election process to the post of shareholder director of the State Bank of Bikaner and Jaipur

A complaint has been registered with the State Bank of Bikaner and Jaipur (SBBJ) against the election of Kunal Dalmia as shareholder director of the bank. The complaint by Mukesh Bansal, who is a shareholder, raises questions about the eligibility of Mr Dalmia and the manner in which the election process was conducted.

The complainant, Mr Bansal has alleged that Mr Dalmia is a defaulter and did not meet the 'fit and proper' criteria laid down by the Reserve Bank of India (RBI) for such a post. He says also that the proxy applications filed by several institutional shareholders were rejected on unexplained grounds, although they were lodged in time with valid documentation.

When Moneylife asked SBBJ about the complaint, an official said that the matter has been referred to the parent bank, the State Bank of India, which will constitute a committee to investigate the allegations.

Mr Dalmia was elected to the post of director of the bank for a period of three years, at a general meeting on 11 August 2010. Mr Dalmia replaces Dr Sanjiv Agarwal who completed his term on that date.

It appears that the bank did not carry out the required due diligence while deciding on the candidature and appointment of Mr Dalmia as shareholder director. According to the guidelines of the Reserve Bank of India (RBI), the Nomination Committee of the bank is required to meet and decide whether the person's candidature is acceptable, based on a broad criteria which includes educational qualifications, field of expertise, experience, track record and integrity.

The bank is required to undertake a process of due diligence to determine the 'fit and proper' status of the existing elected directors/persons to be elected as director under section 25 (1)(d) of the SBI (Subsidiary Banks) Act, 1959.

Mr Bansal, who works with NIIT, has complained that Mr Dalmia concealed material information (that should have been given in the nomination form) which has been reported on the websites, Mr Bansal has also accused SBBJ of failing to obtain independent verification or confirmation from various regulating agencies, besides taking a confirmation from the candidates.

Mr Bansal has also questioned procedural aspects of the election which seem to have directly and substantially affected the election. Giving an example, Mr Bansal says that proxy documents from one of India's largest mutual funds and a shareholder of SBBJ, UTI-Unit-linked Insurance Plan, which has 2,63,300 shares of SBBJ, were rejected on unexplained grounds, even though they were lodged in time and had valid documentation. Besides, the bank didn't convey the status despite repeated follow-ups in person and over the phone. UTI is understood to have filed objections to the rejection of their proxy.

It is understood that the proxy or authorisation documents of some other eligible shareholders of the bank were also rejected and that despite follow-ups with the bank authorities no reason was given to these entities for the rejection, till the commencement of the general meeting. Among these entities are India Capital Fund Ltd (holds 10,00,010 shares), India Institutional Fund Ltd (1,86,700 shares) and India Capital 1 Opportunities Ltd (1,82,550 shares).

Mr Bansal says that that the procedure adopted by the bank for scrutiny of the nomination forms and the election process was not fair and transparent and appears to have favoured a particular candidate. In the light of these issues, he has requested that the candidature of Mr Dalmia be declared null and void and that he should be disqualified.

SK Sharma
1 decade ago
What is RBI doing in this . They should have taken some immediate step like restraining Mr Dalmia from participating in the board. Also, let mr Dalmia explain his defence, if any.
1 decade ago
A public sector bank is the pillar of confidence for all investing public. The matter must be investigated at the highest level and RBI, SEBI, Ministry of Finance and right action must be taken. If any one is in default, must be removed. The election is a democratic process and must prevail in right sense whether it is Shri Kunal or Shri Mukesh.
Ram Prakash
1 decade ago
Cannot belive, a public sector bank management can favour for a candidate in such a way, and that too, a defaulter candidate who has given loss to SBBJ itself. Where is the Corporate Governance, Where is RBI, Where are the watch dogs?
People will loose confidence in banks this way.
Vibha Nath
1 decade ago
Such kind of a behaviour is definitely not expected from a public sector bank which enjoys the trust and confidence of the public. The shareholders of the have infact been given an unfair deal. The bank should have completed all its checks and due diligence must have been done. The credentials of the candidates for such an election which in fact represent the share holder of the company should have been thoroughly checked which clearly in the present case has not been done!! The guidelines laid down by the RBI have been flouted!! The matter which has now been brought to the notice of everybody, should be thoroughly investigated so that justice is done to the aggrieved shareholders and proper and appropriate action must be taken against the persons at fault.
1 decade ago
I connot belive that a public sector bank is doing like this., This type of act certainly demage the image of public sector and also the confidance of share holder of that company. matter must be investiaged and action should be taken by appropirate authority against the responsible persons.
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