In a surprising move the government has ousted Dr Haseeb Drabu as chairman J&K bank without assigning any reasons. A Kashmir Life report.
After 18 months of coming to power, Omar Abdullah led coalition government finally asked J&K Bank Chairman Dr Haseeb Drabu to put in his papers. The curt message came on August 26 evening when state finance secretary Sudhanshu Panday drove to bank’s corporate headquarters to deliver the chief minister’s order. Neither a reason was given nor was it asked.
Friday morning, Drabu drove to his office, for the last time, only to find Panday waiting. He had his resignation typed and it was sent to the directors on fax and their consent recorded. Within half an hour, Drabu was relieved. In the afternoon, Board met and decided to handover charge of the chairman and the chief executive to finance secretary as an interim arrangement. The board in the meanwhile would set up a search committee to identify Drabu’s successor. Board decisions – accepting the resignation, making Panday as interim chairman and setting up a search committee have gone to the RBI for necessary approval.
Drabu took over as chairman of J&K Bank after M Y Khan completed his protracted term in 2005 summer. Drabu was earlier appointed as economic adviser to the state government by the PDP led coalition government soon after it replaced the NC in November 2002.
An economist who had earlier served Planning Commission and later as the national editor of Business Standard, had come to his home state with vast experience. Though as a member of the Madhav Godbole Committee he had a brief stint in J&K during Dr Farooq Abdullah’s reign, it was only after 2002 that he got a role that helped him to contribute in state’s economic affairs.
Apart from rescuing the budgeting of the state from the babus for the first time in history, his contributions have been enormous. His first major exercise was to ensure multi-lateral funding that was usually denied to Kashmir for being a disputed territory. As a huge, low cost loan was being discussed with Asian Development Bank, the then Prime Minister Atal Behari Vajpayee suggested him that he would give him more funds than the ADB, but Drabu insisted on ADB funds because the money comes with its own developmental parameters and accountability. It was with this fund that the ERA is operating. He, however, could not secure a similar loan with a Japanese donor because the state lacked interest.
Helping draft the Rs 8000 crore Prime Ministers Reconstruction Plan (PMRP) was the second major assignment in the UPA-1 regime. But when Dr Manmohan Singh unveiled the PMRP it was Rs 24000 crores – the numbers inflated as central government intelligently rolled all the central government and defence projects into the package. From negotiating Sawalkote deal to Chenab Valley Power Projects and more recently a tunnel between Kishtwar and Islamabad, Drabu would try to get best of his 18-hour-work-day schedule.
Then, Drabu had the full confidence of the chief minister and was literally functioning as the finance minister as well. With a bit of change, almost the same situation existed in second inning of the last coalition.
The situation was destined to change after the 2008 elections. After NC led coalition took over, Drabu resigned as economic adviser. This paved way for appointment of Jalil Ahmad Khan, a retired IAS officer, as the new economic adviser. Though Drabu had offered to quit as Chairman and Chief Executive of the J&K Bank but Omar asked him to continue. This was despite the fact that Omar had pressures, especially from party’s old guard, to send Drabu home.
As leader of state’s premier financial organization that interestingly is the only listed one, Drabu’s contributions are acknowledged widely. The pain that the trade could feel after his resignation is just an indicator to that effect. Even the market panicked and investors needed a reassurance that they are invested with the best bank. “Institutions are important than individuals,” he told an emotional gathering of bank employees on his last day. “I think we have transformed the bank from a good institution to a great institution.”
But for achieving that target, he definitely was working on a script that he owned. This, he would usually tell, is the outcome of the ‘looking inward’ strategy adopted in 2005. “The basic contours of the strategy were to deliver more credit to the J&K economy and create a footprint in the state that can not be replicated by any other FI.” Within five years, the bank’s credit take -off in the state surged from Rs 1200 crore to Rs 12000 crore as its credit deposit ratio soared from 20 to 50 percent. Seventy percent of its deposits and 87 percent of its advances were in J&K when Drabu was sent home.
The strategy paid well. The bank consolidated its empire within the state bringing it to a position that claims to be the ‘best in breed’ of Indian banks. Right now, J&K Bank is among top three banks in India as far as the fundamental parameters like return on assets (1.4%), return on equity (20%), cost to income (36%), impaired asset level (0.28%) and coverage ratio (90%) are concerned.
Drabu secured the home turf and pre-empted the impending threat of new generation private banks entering the state. “Now under the second stage of our strategy we are looking outwards, carving a niche nationally” he told his AGM last month. Signs of stability in the national economy are conducive to absorb high volumes of debt. Before doing anything on that front, Drabu put in his papers. Insiders said the bank was in the consolidation stage and needed time.
No reasons were given for his ouster. This has come at a time when Kashmir is passing through very bad days. His resignation has led to the belief that he is being crucified for empowering the people economically. Only coming days will indicate whether Omar is able to find a person who fits in Drabu’s shoes.