Sarbajeet K. Sen

New Delhi, Oct 2

A FURTHER streamlining of the working of public sector banks is in the offing, with the Ministry of Finance holding talks with the Reserve Bank of India to prepare a set of corporate governance norms that would guide the functioning of the Board of Directors.

Senior Finance Ministry officials said that besides laying down certain guiding principles for the operations of the Boards, the norms would also lay down detailed `fit and proper' norms for nominee directors.

"We are compiling corporate governance norms for PSU banks for which we are having consultations with the RBI," a top Finance Ministry official told Business Line.

He said that the norms would be an extension of the overall direction on corporate governance outlined by the RBI for the banking sector and would be on lines of the recommendation of the Dr Ganguly report on the subject.

"We would attempt to outline the role of directors, set `fit and proper' norms for nominee directors of PSU banks and training and capacity building at the top levels," the officials said.

The norms would also spell out the board sub-committees that banks need to constitute and the details and the manner in which agenda for discussion should be presented to the board.

"At times the board papers are so voluminous that directors do not have the time to go through them. Moreover, the time given to go through them is also too little," the official said.

The norms would be an attempt to ensure that the banks comply with the regulatory norms and work in the interest of all stakeholders. "We have given banks a lot of autonomy. The corporate governance norms would ensure that the autonomy in exercised in accordance with the regulatory framework and the norms of good governance," officials said.

(This article was published in the Business Line print edition dated October 3, 2005)
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