At a time when the financial sector is passing through a rough patch and looking at ways to conserve capital, country''s second-largest lender Punjab National Bank (PNB) has bought three Audi cars to ferry its top management.
According to sources, the PNB took the delivery of these high-end luxury cars worth approximately Rs 1.34 crore last month, unmindful of the coronavirus outbreak, subsequent nation-wide lockdown and its crippling effect on the financial sector as well as the economy.
The annual depreciation on this purchase will be around about Rs 20 lakh, sources said. These luxury cars, sources said, will be used by the managing director (MD) and two senior executive directors.
Besides the MD, there are four executive directors given the size and scale of operation of the bank. These cars were purchased after the approval from the board and within the sanctioned limit for the whole-time directors, sources said, adding, this is a part of routine replacement and the unutilised Budget of the last year was carried forward for the purchase.
Interestingly, the secretaries in the union government and even Cabinet ministers use Maruti Suzuki Ciaz, much less expensive than German car Audi purchased by the PNB. In protocol, the managing director of a public sector bank is equivalent to an additional secretary in the central government.
Even the chairman of the country's largest lender State Bank of India who is considered a notch above the managing director of any nationalised bank uses Toyota Corolla Altis when in capital. In the wake of COVID crisis, the finance ministry last week asked all ministries and departments not to initiate any new scheme in the current financial year and said that there is a need to use resources prudently in these difficult times.
Also, schemes that are already approved for the current financial year will remain suspended till March 31 next year or further orders. This would also include those schemes for which in-principle approval has been given by the respective departments.
According to an office memorandum of the department of expenditure in the finance ministry, the changes have been made as there is a need to use resources prudently in accordance with emerging and changing priorities. It is to be noted that Punjab National Bank suffered heavily due to the Rs 14,000 crore Nirav Modi scam, which was unearthed in 2018.
Nirav Modi and his uncle Mehul Choksi duped PNB of Rs 14,000 crore through issuance of fraudulent Letters of Undertaking (LoUs), in connivance with certain bank officials. For the third quarter ended January 2020, the bank reported a loss of Rs 501.93 crore due to substantial increase in bad loan provisioning.
The bank had posted a net profit of Rs 249.75 crore for the same period a year ago. The bank made a provisioning of Rs 4,445.36 crore for bad loans during the quarter under review as against Rs 2,565.77 crore parked aside for the year-ago period.