The Hindu Business Line : Bank chiefs welcome move to include more whole-time directors

THE plan to increase the number of whole-time directors on bank boards from two to four would help in faster decision-making and would also allow for more promotions.

Earlier this month, the Central Government moved a Bill, which included a proposal to increase the number of whole-time directors on bank boards from two to four.

Most bank chiefs have welcomed this move, as they feel it would allow for faster decision-making and also give more promotion opportunities for officers at the general manager level.

At present, all public sector banks, except State Bank of India, have two full-time directors - the Chairman & Managing Director and Executive Director. This limits the span of control to just two people and makes operations difficult for a large public sector bank, say bank chiefs.

Mr Cherian Varghese, Chairman and Managing Director, Union Bank of India, said: "Now all general managers have to report to the ED, while all decisions regarding credit and spending are taken by the Executive Committee of the Board. However, as this committee meets only once a month, it delays decision-making."

Under the new system, the four full-time directors can work as an executive body and take decisions.

The Board will be then free to concentrate on policy matters, Mr Varghese said.

It is not clear how the posts will be divided. it could either be one Chairman and three directors or two more additional managing directors to the present system of one CMD and ED, say banking officials.

Four directors heading different functions is the norm even in a small private sector company and in all private banks, pointed out Mr M.V. Nair, Executive Director and Managing Director, Dena Bank.

"Under the current system, the pressure is too much on the directors of banks. Even a small private sector company has different directors for functions like finance and so on. So, a similar system for public sector banks is welcome," he said. Other advantages that banker see from this move are wider choice to select the chairman and more opportunity to promote officers at the general manager level.

As Mr Varghese said: "As there will be more full time directors, whoever is the best will get selected as chairman. This will mean more competition and wider choice."

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