At a time when the financial sector is going through a tough patch, Punjab National Bank (PNB), the country's second-largest lender, has purchased three Audi cars to ferry its top management.
According to sources, last month the PNB took delivery of these high-end luxury cars worth approximately Rs 1.34 crore, unaware of the coronavirus outbreak, subsequent national lockdown, and its devastating effect on both the financial sector and the economy. The annual depreciation on this purchase, sources said, will be about Rs 20 lakh.
These luxury cars will be used by the managing director (MD) and two senior executives, sources said. There are four Executive Directors in addition to the MD, given the bank's size and scale of operation. These cars were purchased after the board 's approval and within the full-time managers' sanctioned limit, sources said, adding, this is part of routine replacement and the last year's unused budget was forwarded for purchase. Interestingly, the union government secretaries and even Cabinet ministers use Maruti Suzuki Ciaz, much less expensive than the PNB-bought German car Audi. In the protocol, a public sector bank's Managing Director is equivalent to One Additional Central Government Secretary. Even the chairman of India's largest lender state bank which is considered a knot above any nationalized bank's managing director uses Toyota Corolla Altis when in the capital. Last week, amid the COVID crisis, the finance ministry asked all ministries and departments not to launch any new scheme in the current financial year and said in these tough times there is a need to use capital with prudence. Schemes already approved for the current financial year will also remain suspended until next year's 31st March 2020, or further orders. This would also include those schemes for which the respective departments have granted approval of in principle. The changes have been made, as there is a need to use resources prudently in line with evolving and changing priorities, according to an office memorandum from the department of expenditure in the finance ministry. It should be noted that the National Bank of Punjab suffered greatly as a result of the Rs 14,000 crore Nirav Modi scam, which was unearthed in 2018. Nirav Modi and his uncle Mehul Choksi duped Rs 14,000 crore PNB by issuing fraudulent Letters of Undertaking (LoUs), in connivance with some officials at the bank. The bank reported a loss of Rs 501.93 crore for the third quarter ended January 2020, due to a substantial increase in bad loan provisioning. For the same period a year ago the bank had reported a net profit of Rs 249.75 crore. During the quarter under review, the bank made provision of Rs 4,445.36 crore for bad loans as opposed to Rs 2,565.77 crore parked aside for the year-ago period. It is unusual to see the kind of situation that is ongoing with our country’s economy where the unemployment rate is at an all-time high however, certain decisions by the Elite classes seem to have no effect on the current crisis.