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'DNA' investigation: Rules violated in Nabard chairman’s appointment

Prakash Bakshi and UC Sarangi were appointed to the top post despite failing to meet eligibility criteria set by the Reserve Bank of India (RBI).

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Prakash Bakshi and UC Sarangi, the present and former chairman of Nabard, and the main votaries of the proposal to appoint the Boston Consulting Group as consultant for the bank’s restructuring, were appointed to the top post despite failing to meet eligibility criteria set by the Reserve Bank of India (RBI).

“While Sarangi is part of the strong IAS lobby and has good friends in political parties, Bakshi was made chairman because he was Sarangi’s man,” said a top official of Nabard who was close to both.

The RBI did not object to the appointments. According to its eligibility criteria, the chairman of Nabard, “should have 25 years of executive experience… of which at least 3 years should be at board/apex/top management level”.   

When Bakshi applied for the post chairman in December 2010, he had just over two years experience in top management. Even when he took over as chairman in June 2011, he did not have the requisite three years experience.

Bakshi was appointed ignoring the claims of several senior candidates with more experience who met the eligibility criteria. “Even if we consider Dr Bakshi as someone exceptional, if the criteria were to be only two years of experience, then some other exceptional candidates would have applied,” said KG Karmakar, former Nabard MD.

Overall, 23 candidates were shortlisted, including two executive directors (EDs) senior to Bakshi. Two heavyweights Amitabh Verma, joint secretary in the ministry of finance who had over 3 years’ experience on Nabard’s board, and Sanjay Kaul, former IAS officer working with microfinance and NCDEX, were also ignored despite meeting all criteria.

When Bakshi’s name stared doing the rounds at the end of 2010, several RTIs were filed seeking details and apprising the government of his ineligibility. One application, filed by Joginder Rohilla, president of the Rashtriya Yuva Janata Dal, delayed the appointment by some months.

“Two officials of the DoPT (department of personnel and training) came and asked me why I needed the information,” Rohilla recalled. “I told them that as a citizen, I need to know.” He never got a reply despite receiving an acknowledgment. Even an appeal to the central information commission went unanswered.

Sarangi-backed bureaucrats forced the government to wait till Karmakar’s term as MD was over before appointing Bakshi. This was because it would have been inappropriate to make a junior ED chairman while Karmakar was still MD.

It is widely believed that Bakshi was Sarangi’s man and the latter pushed his case. When Bakshi defaulted in repaying his housing loan from Nabard, Sarangi cleared his name and reduced the penalty from Rs 1.6 lakh to Rs 931. A case was filed with the CVC that noted, “In the matter of housing loan default by Dr Bakshi, ED, involving violation of rules, at least a non-recordable warning should have been issued. By closing the matter without any action, even if there is no vigilance overtone, Chairman [Sarangi] is sending a wrong message to the rank and file of the bank.” For a similar default in the RBI, an officer was dismissed.

Sarangi’s appointment as chairman also violated norms, the Uttarakhand High Court (HC) and the Supreme Court (SC) held.

Sarangi became chairman in 2007 but he did not resign from his parent IAS cadre as others before him had done. In 2008, a writ petition was filed by Nabard employee SA Das in the Uttarakhand HC. In an interim order, the court restrained Sarangi from functioning as chairman, saying: “We are of the opinion that the appointment of Sarangi having being made in violation of statutory provisions, he cannot be allowed to continue as chairman, NABARD.” It, however, gave the central government and Nabard six weeks to challenge its order in the SC. During this period, its order would be held in abeyance.

The government and Nabard both filed SLPs that went to two different benches. The first bench upheld the HC order, the second agreed that Sarangi’s appointment violated statutory provisions but held that the Uttarakhand HC did not have jurisdiction in the matter. It said: “All the norms of procedure and basic qualification and experience criteria were relaxed to accommodate the incumbent chairman who has still not resigned from his parent cadre IAS (Maharashtra).” Further, the circular of the DoPT as to the procedure for the search and selection committee was not followed in letter and spirit, the court said. “It is a pre-requisite that an advertisement has to be made, at least four weeks’ time has to be given to potential candidates for applying, but here the appointment was made within a week without any advertisement.”

As per the court order, there was initially an advertisement by the RBI for the post, to which 120 candidates (not Sarangi) applied.

Four were interviewed, none were found suitable. Afterwards the criteria were relaxed but not advertised and the selection committee appointed Sarangi who had no formal qualification in finance and management and had just 16 years of experience as against the 25 years stipulated by the RBI.

Despite, repeated attempts to contact him, Bakshi did not respond.

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