Daijiworld Media Network - Mangaluru
Mangaluru, Mar 25: Following the resignation of five directors of MCC Bank over alleged 'mismanagement' and 'irregularities' in the Bank, the board of MCC Bank has issued a clarification to daijiworld refuting the charges.
The clarification, issued by MCC Bank chairman Francis Cutinha states:
"The chairman and the board members of MCC Bank strongly refute the malicious allegations levelled against the management and chairman by the five board of directors who resigned. The same five board of directors since the election of the new board in September 2013, have made every possible effort to undermine the smooth functioning of the board. The same allegations which were highlighted in the Daijiworld article (dated March 23, 2015) were sent to registrar of the cooperative societies, and the Reserve Bank by this group. Both the governing bodies were satisfied with the explanation and evidence provided by MCC Bank.
"The Bank has concluded internal audit, statutory audit and full Reserve Bank audit recently and the evidence and explanation provided by the Bank against these allegations were again verified by the Reserve Bank team which has given a clean chit to the MCC Bank, following their audit. We want to assure the readers (of daijiworld) and customers of MCC Bank that the Bank is in safe hands and professionally managed.
"The shareholders of the Bank elect a particular director with the hope that they will make every effort to improve the Bank and take it to a greater height in the next 5 years. We feel that resigning within a period of 18 months is a grave breach of trust of the shareholders who elected them. With this thought in mind, the chairman and the board asked these five directors who resigned to reconsider their resignation, however they placed impossible preconditions.
"When all their efforts in subverting the board and the Bank failed, they have now gone to the media to level false allegations and cause possible harm to the Bank and they chose the time as the end of the financial year where it could hurt most. The readers are the best judges.
"It is noteworthy to bring to the people's attention that the five directors who resigned did not feel it necessary to attend the last AGM of MCC Bank and in our opinion thus showed total disregard and disrespect to the sentiments of the members who had voted for them. Their non-cooperation to the board was clearly made visible to the members.
"Regarding claims that they were not included in the sub-committees; there are 3 sub-committees and only 6 directors have the scope to be nominated to these sub-committees, excluding chairman, vice-chairman and general manager. Out of the 6 directors, one of the directors of this group was nominated to the audit committee but he never attended any meetings.
"The main reason for the CD ratio to fall, is the reckless credit advanced by previous chairman and his team to risky borrowers and that too in CRE (real estate) category. When the permissible level to advance loans in this category is 10% , the previous board were overzealous to increase the CD ratio and granted CRE loans up to 15%. The current board instead of granting new loans in this category, has the herculean task of bringing down CRE ratio to 10% and also reduce the Non-Performing Assets (NPA) occurred due to bad loans granted by the previous board. For the information of the readers, the Bank declared an NPA of 9.1% for the financial year ending 2014 and nearly half of this NPA was due to bad loans granted by the previous board. Notwithstanding the above, the current board is very positive due to some hard fought loan recoveries managed recently and ensures utmost importance to the recovery process. The current board is very clear in its responsibility that it is necessary to have quality assets than just increase in number to look good in the balance sheet.
"Regarding the allegation that some of the gold in founder branch was overweighed and the loan given was more than the permissible level, the RBI was notified in this regard and as per the guidelines, the investigation is continuing. In the sidelines, the Bank has succeeded in recovering and correcting major part of these loans granted and is hopeful to correct the rest. In this context it is noteworthy to bring it to the attention of the members and readers the following:
• This misappropriation started during the tenure of the previous board due to inappropriate control process and was detected by the current management.
• That the main official found guilty in the preliminary investigation was found guilty of misappropriation in the year 2006 and he was proposed to be dismissed. The previous board led by Melwyn D'Cunha reinstated this official and the same official is now involved in the current misappropriation.
"The board assures the members and readers that they will expose and punish the guilty staff as per the laid down procedure once the investigation is complete.
"The allegations that the Bank has promoted a few staff of their choice is false. The Bank for the first time in its history has defined a clear staff promotion policy, which has been circulated to all staff through their branch managers. It defines criteria for the eligibility for promotion and then the eligible staff have to go through written test, interviews and their past achievement is also considered. All these are given weightage marks and the candidates who clear the set criteria are promoted. As per this exercise, 19 staff were promoted. Melwyn D'Cunha and his team are aware of this policy and have lauded the policy for its clarity.
"Regarding the allegation that the Bank has done indiscriminate staff hiring which the group has considered as a big financial burden, the Bank would like to place before the readers the actual numbers. At the time the new board took over, there were 117 staff which included 4 contract staff hired by the previous board. The current staff strength stands at 118. The Bank has permission to hire up to 150 staff. The Bank recently started a central sales unit on an experimental basis to increase the Bank's business and to reach every household. For this there are seven staff headed by one team leader recently hired. They get only basic salary and sales incentives are based on the business they bring in above a certain threshold. The board believes that MCC Bank needs to grow and to do that we need to have an aggressive sales approach.
"In conclusion the chairman and board of directors of MCC Bank want to assure the members and readers that the Bank is managed by professionals and is in safe hands. The elected board of directors are supported and advised by two professional and one functional director who in between them share more than 100 years of professional banking experience. The board is working hard to make MCC Bank a vibrant Bank at par with other nationalized and private banks to be able to serve all sections of our community and society."