"Monitoring the situation": PTC India clarifies after NBFC arm's directors quit

Amid the ongoing uproar over the resignation of independent directors of PTC Financial Services (PFS), PTC India Ltd, which owns the NBFC, clarified on Thursday that it is "closely monitoring the situation" and has taken initiatives to address the governance issues. 

Commenting on the same, Dr Rajib K Mishra, Director (M&BD) & CMD In-charge, PTC India Ltd., said in a statement, "The management of PTC India Ltd is committed towards corporate governance of highest standard in its functioning as well as of its subsidiaries. The interest of stakeholders is of prime concern and the company would like to assure total transparency and ethical best practices." 

He further stated that the business practice model of PTC & PFS has "a proven operational track record with strong financials". 

Mishra added that the company is "closely monitoring" the situation and has observed that "there are differences of opinion at operation and board level of PFS on few issues." 

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He noted that since the issues are of "legacy in nature", they are being looked into by a senior-level committee.  

"We have taken initiatives to address the governance issues. We are committed towards streamlining all operational processes and adopting best available practices of an NBFC. Maintaining highest ethical standard, all possible steps are being taken to induct reputed professionals to the Board of PFS for sustained future growth of the organisation," Mishra said. 

Three independent directors of PTC Financial Services resigned on Wednesday, January 19, from the company's board with immediate effect alleging corporate governance and compliance lapses on several occasions on the part of the PFS' management. 

The independent directors - Santosh B Nayar, Kamlesh Shivji Viakmsey, and Thomas Mathew T - flagged grave concerns on the alleged conduct of the management led by PFS MD and CEO Pawan Singh. 

The independent directors, in their resignations, alleged that Singh's actions were in contravention of his powers. 

They also questioned PTC India's failure to take action in the matter. The independent directors cited certain actions of the Chairman of the Board and Managing Director of the company are "ultra-vires" and "in violation" of the provisions of the Companies Act, 2013. 

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They also referred to the issues regarding Rs 125 crore-bridge loan given to NSL Nagapatnam Power and Infratech Pvt Ltd, besides alleging that "no action" has been taken on certain corporate governance issues. 

Pointing out that independent directors' communication was "blatantly ignored", they said, "such non-cooperation on the part of the management and the company is unfortunate and a deterrent to the spirit of the law and impedes the functioning of the independent directors on the board of the listed company". 

PFS, promoted by PTC India Ltd (PTC), is registered with the RBI as a Non-Banking Financial Company (NBFC). 
The systemically important non-deposit taking NBFC has been classified as an 'Infrastructure Finance Company (IFC)' by the RBI. 

In recent memory, it is possibly the first instance where all the independent directors of a company have resigned en masse.

The directors have also sent of their resignation letters to the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI) and Ministry of Corporate Affairs. 

The company also submitted copies of the resignation letters to the stock exchanges.