Why T Latha Resigned as MD & CEO of Dhanalaxmi Bank?

Moneylife Digital Team 01 November 2019

T Latha had resigned as managing director (MD) and chief executive (CEO) of Dhanalaxmi Bank resigned in 15 months, although her appointment was for three years. Ms Latha cited ‘personal reasons’ for her resignation, but there is a less known story that has been brewing in the background, which is understood to have triggered the decision.

This pertains to her previous job as general manager (GM) at Punjab National Bank (PNB) during the infamous Nirav Modi scam. The internal investigation has led to a vigilance charge sheet being issued to Ms Latha. Strangely enough, this charge sheet was issued to her on her last day of her service at PNB. Documents perused by us show that the charge sheet issued on 30 June 2018 has sought a major penalty with vigilance overtone. It appears that her appointment as the head of Dhanalaxmi Bank had already been cleared by then.

Ms Latha responded to the charge sheet in the first week of July 2018. The MD and CEO of PNB then constituted a disciplinary authority to conduct enquiry in this matter. The enquiry officer submitted his findings in February 2019.

After perusing the charge sheet and Ms Latha’s response to the findings of enquiry officer the disciplinary authority found certain charges as proven and decided to award punishment on 29 June 2019. The punishment was of "reduction in one lower stage in pay scale..." to Ms Latha.

This is understood to have triggered specific regulations under the PNB Officers Service Regulations. An anonymous letter to the Reserve Bank of India is understood to have listed the provisions triggered by PNB rules and said that this makes her vigilance clearance for the Dhanalaxmi Bank job, null and void.

Section 20(3)(iii) of the Regulations provide that disciplinary ‘proceedings would continue till final order is passed”, even if the officer concerned has retired. The regulations also impact the retirement benefits that the officer is entitled to.

Ms Latha left PNB to join Dhanalaxmi Bank on 1 July 2018. She was appointed as MD and CEO of Dhanalaxmi Bank for three years following retirement of G Sreeram. Considering this, the award states that the penalty against Ms Latha should be deemed to be issued on 30 June 2018, her last date of service in PNB.

We understand that the letter to the RBI asked whether Ms Latha had declared the disciplinary proceedings that were pending against her and, if she had, how was she considered ‘fit and proper’ by the RBI. The actual indictment in PNB’s disciplinary proceedings happened only after.

Moneylife learns that the resignation was a result of the inquiry and the anonymous letter sent by bank officials to the regulator.

Comments

User

Sudhir Mankodi

4 years ago

How PNB vigilance department cleared her when disciplinary action was \"contemplated\" against her when she was being considered for the Top Post at DLB. Perhaps, due enquiries were not made by regulatory authority also. what about herself? When the charge sheet under major penalty proceeding with vigilance angle was issue was she not morally obliged to step down at that time? And what about DLB board? They also turned blind eye to these happenings? Possible that few of the borrowers from PNB might have been accommodated by DLB under her stewardship. These, if any, should be thoroughly investigated. No wonder DLB also is facing the trouble requiring it to release full page advertisement in it\'s own defence.

Compliments for your well researched article, as always!

K V RAO

4 years ago

Interesting and quite revealing. Keep us informed with such well informed reports. Also proves that high profile officials when it comes to their own position become dishonest and continue to seek wealth and position even after retirement.

Ramesh Poapt

4 years ago

surprising.. if not shocking/joking.