Big Hearted SBI Chairman Agrees to Pay for Salaries to KF Employees-  Will He Repeat This For All Small and Medium Scale Industries Who Fail to Pay Salaries Due to Losses ?  

by

Danendra Jain dkjain49709@gmail.com

SBI Chairman has agreed to pay Rs.50.00 crores to NPA declared and defaulting company Kingfisher on humanitarian ground so that sick company Kingfisher can pay salary to employees. 

Is SBI Chairman authorized by investors and depositors to permit such charity to Kingfisher?   Is such whimsical decision of SBI Chairman legally valid and reasonable?


May I ask Mr. Chairman,  will he pay similarly to other defaulting companies which are unable to pay salary to their staff?      If yes,  he should be ready with billions of rupees in hand to distribute such charity to hundreds of such companies who have not only defaulted in repayment of bank’s dues in time but also failed to pay salaries to their staff though promoters of such sick companies spend lavishly on their own families.

There are several small scale industries and medium size industries of the same promoter which are running in loss and not in a position to pay salary to their staff but some other companies of same promoters are booking huge profit.


Will SBI afford making charity for all such sick companies or it is only for Kingfisher Company?  Will it be justified for SBI Chairman to sanction Rs.50.00 crore to Kingfisher on humanitarian ground keeping in view that SBI is owned by millions of depositors and investors?  

Will SEBI, RBI, GOI and investors and depositors of State Bank allow such charity to a sinking company?

Has Credit Approval Committee or Management Credit approval Committee has approved such charity which has been unilaterally announced by SBI chairman in response to media news about suicide of a woman , wife of staff of Kingfisher?

P.S. - Comments by Rajesh Goyal :-

Mr Jain has raised a very valid point.   There is no doubt that at first instance I also felt that SBI is doing a good job to protect the interests of the employees of KF.   However,  on second thought, the whole argument of humanitarian purpose falls on ground as banks are commercial organisation and are answerable to shareholders.  In bank we frequently come across such instances.   A number of businessmen come for enhancement of limits / short term funds on the plea that they do not have even funds for payment of salaries.    During my service also, this has happened on number of occasions where we insisted that he should arrange such funds from his own resources and they are asked to provide additional securities for additional funds.   There is no doubt that KF owner is very rich man and has massive assets.  He can easily sell some of such assets of other companies / his own share and pay for the salaries of  KF staff.   Why SBI should indulge in charity on behalf of one of the richest man who is known for lavish spending and life style.   What will be the response of SBI in future if some other companies take SBI to court on non payment of funds for overdue salaries?   Will this become a trend setter that banks will pay for overdue salaries in all cases where banks have lent funds.    These questions needs to be pondered before SBI jumps to release funds as per wishes of its Chairman.