Jayakumar takes over as BoB's new CEO as the bank deals with black money case

P S Jayakumar, former Citibank executive, on Tuesday took over as the managing director and chief executive officer of Bank of Baroda at a time when the public sector bank is struggling for an image-makeover as CBI probes into the suspected Rs 6,100 crore black money foreign exchange transfer case.

The appointment of Jayakumar comes as a government policy to overhaul public sector banks by bringing in private sector executives. Jayakumar now faces the challenge of image makeover of the public sector bank whose reputation has been hit by the suspected black money case.

The bank leadership post had remained vacant for as many as 15 months after its Chairman S S Mundra moved to take over as the RBI Deputy Governor last year. Ranjan Dhawan, who was the MD & CEO-in-charge after Mundra, had retired on September 30.

Bank of Baroda on Monday maintained that as much as 90 per cent of the Rs 6,100 funds have been routed via legitimate sources from 30 banks. The probe is expected to get bigger with investigations leading into the 30 private and public sector banks.

The bank had also stated that the figure of Rs 6,100 crore is likely to be exaggerated.

What is the black money case?

CBI and Enforcement Directorate on the weekend raided quite a few branches of Bank of Baroda and residences of bank's assistant general manager S.K. Garg and Jainish Dubey, a foreign exchange dealer.

Rs 6,172 crore was allegedly illegally remitted to some companies in Hong Kong between August 1, 2014 and August 12, 2015 from Bank of Baroda's Ashok Vihar branch in New Delhi.

The remittance was for import of dry fruits and pulses but allegedly there were no actual imports.

The money was remitted by 59 companies through their newly-opened current accounts at the bank's Ashok Vihar branch.

The case came to light after the bank complained about the unusal remittances that were discovered during an audit of its accounts.

The bank has terminated the services of its auditor and suspended the Ashok Vihar branch head and another executive who was dealing with foreign exchange.

Another irregularity found:

This is the second illegality that the bank is dealing with. Last week, it had discoverd Rs 350-crore bill discounting irregularity in its operations. The bank had discounted bills worth Rs 350 crore for which the payment never came.