• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest
• The New Manager

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources
• In Focus
• In Depth

Group Sites

• The Hindu
• The Hindu ePaper
• Business Line
• Business Line ePaper
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

K.R. Srivats

New Delhi, June 29 The Finance Ministry is not in favour of allowing public sector banks (PSBs) to nominate Government nominee directors as members of the management committee despite a request to do so from many such banks.

While both the Government and RBI nominees were earlier nominated as members of the management committee, the Government had in February this year amended the constitution of the management committee of the board in PSBs to specify that the Government and RBI nominees cease to be members of the committee.

The Finance Ministry, however, sees no justification to exclude the RBI nominee director from the management committee given that the central bank has chosen to replace the serving officers with retired officers/non-officials as nominee directors.

Official sources said a number of PSBs including Punjab & Sind Bank, which has recently been in the midst of board-level storm, had urged the Finance Ministry to permit the PSBs to nominate Government and RBI nominee directors on the management committee.

“Government nominees will not be in management committee.

But there may be merit in RBI nominees being there now that they could nominate non-serving officials/retired officials of RBI as nominee directors,” sources said.

Management committee, whose composition is generally uniform for all PSBs, has executive powers to sanction credit and reach settlements/compromises.

As per Government guidelines, a management committee comprises Chairman and Managing Director, Executive Director and CA Director as permanent members. It also has three-other non-official directors who rotate every six months.

Although the idea of corporate governance and managerial autonomy was laudable, some of the PSBs felt that this could work if one had a professional board and the independent directors could provide professional input and also share corporate responsibility.

Punjab and Sind Bank had recently submitted to the Finance Ministry that it did not have any professionally qualified director on the board and that the removal of Government/RBI nominee from the management committee has proved to be counter-productive.

More Stories on : Public Sector Banks | Financial Policy | People

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Kharif sowing picks up on good monsoon rains

Copyright © 2007, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line