Vepa Kamesam, former deputy director of the RBI, has resigned from the High Mark Board as independent director. The troubled credit bureau, which urgently needs an injection of money to remain viable, allotted 70% of its ESOPs to four independent directors, including Mr Kamesam and its chairman Prof Pandya

Moneylife’s reports on the affairs at the troubled and cash strapped High Mark Credit Information Services Pvt Ltd (High Mark Credit Bureau) seems to have claimed its first victim. Vepa Kamesam, one of the most high profile directors has resigned from the High Mark Board. However, it is not clear as to what would happen to the 1.63 lakh shares that Mr Kamesam was allotted.

Mr Kamesam, a former deputy governor of the Reserve Bank of India (RBI) was one of the four directors who, along with Prof Anil Pandya, chairman and founder-director of High Mark, bagged 70% of the employee stock ownership plan (ESOP). Mr Kamesam was allotted 1.63 lakh shares in the credit bureau as ESOPs.

According to sources, High Mark violated Credit Information Companies Regulations (CICR) Act, 2005 (CICRA) as well as Companies Act, while appointing Prof Dr Anil Pandya as its executive chairman. The issue was first raised by Siddharth Das, former Chief Operating Officer (COO) of High Mark, before the company board. But the board, including Mr Kamesam, apparently ignored it.

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 Prof Pandya continues 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.

Subsequently, Das sent a legal notice raising this issue. Ajay Kohli, former chief executive of High Mark, tried to bring this to the attention of the board. This too has been ignored so far by the company Board.

As Moneylife reported earlier, High Mark's four independent directors, Dipankar Basu (1.63 lakh), Vepa Kamesam (1.63 lakh), Rajiv Johri (6.53 lakh) and Shyam Sunder Suri (6.53 lakh) and its chairman Prof Anil Pandya (3.27 lakh), together hold 70% of ESOPs. Of these, while Prof Pandya was designated executive chairman in position, if not in responsibilities, the other four directors have had little operating roles.

The board also allotted 1.9 lakh ESOPs to Kiran Moras, its senior vice-president and 2.7 lakh to Siddharth Das, its executive vice-president and chief operating officer. These options lapsed due to the resignation of both these officials. While Moras resigned on 21 March 2012, Das left High Mark on 20 March 2012. We learn from reliable sources that Prof Pandya has been indiscriminately sacking senior officials who are in the process of filing litigation.

Meanwhile, High Mark seems to be operating on the understanding that the Italy-based CRIF credit bureau will be allowed to bailout the Credit Bureau quite easily. We learn that CRIF executives have already been meeting senior executives to assure them of support and continuity after takeover. This development suggests that CRIF is completely confident of a green signal to acquire High Mark although the business is ostensibly strictly regulated by the RBI.

There is no evidence that Mr Kamesam has been perturbed by this alleged violation of the CICR Act and the possible action by the RBI. Of course, it remains to be seen whether the RBI will act atleast now, following resignation of Mr Kamesam, a former deputy governor of the central bank.

Mr Kamesam was appointed as deputy governor of RBI on 1 July 2001 and his tenure ended in 2003 after getting extensions twice. He was the first deputy governor of the RBI to hold the position even after crossing the age of 62 years.

Prof Pandya and Dipankar Basu (a former IAS officer of the Gujarat cadre and also an independent director of High Mark) did not respond to repeated text messages. Our email query addressed to Mr Basu and to Prof Anil Pandya was also not answered at the time of publication. Their response, if any, will be incorporated when it is made available. 

High Mark is a start-up promoted by Prof Pandya and Anuj Desai. In 2005, Professor Pandya founded High Mark and in 2007 the company applied to the RBI for a license to operate as a credit bureau.