Money & Banking

Fill up Non-Executive Director posts: PSBs to Finance Ministry

Mumbai | Updated on October 22, 2020 Published on October 22, 2020

Public sector banks (PSBs) have requested the Finance Ministry to fill up Non-Executive Director positions to ensure adherence to corporate governance norms and constitution of board-level committees. Some of these positions have been vacant for almost seven years.

Vacancies

Currently, there are vacancies in the category of Non-Executive Chairman, Workmen Employee Director, Officer Employee Director, and Director (under the Chartered Accountant category), and Part-time Non-official Directors, among others.

With six PSBs getting merged into four PSBs with effect from April 1, there are now 12 state-owned banks in the country. Non-Executive Director vacancies exist in a majority of these banks.

“All 12 PSBs have unfilled vacancies of Officer and Workmen Director positions. It is a purely political decision.

“If the positions are vacant, the bank is free to do and undo things as per the select few on the board. Hence, (bad loan) write-offs are going on unchecked,” said S Nagarajan, General Secretary, All-India Bank Officers’ Association.

He underscored that a PSB board without an Employee and Workmen Director can steamroll its decisions without any opposition.

Banking expert V Viswanathan observed that if the Non-Executive Chairman is not on the board then corporate governance gets compromised as the bank’s top-brass, led by the MD and CEO, will call the shots at board meetings.

Workmen and Officer Directors protect employees’ interests by ensuring suitable promotion/ transfer policies, welfare benefits, and red-flagging of frauds and other wrongdoings, he added.

The Director under the Chartered Accountant category is the third eye after the Statutory Auditor, emphasised Viswanathan.

This Director, who is also the Chairman of the Audit Committee of the board, looks into internal audit, compliance with the inspection report of the Reserve Bank of India, and compliance and monitoring, among others.

If this position is vacant then there is a possibility that whatever financials the Chief Financial Officer presents will be accepted by other board members without demur.

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Published on October 22, 2020
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