Strict norms for board nominees

Public sector banks want the Reserve Bank of India (RBI) to stipulate that all the nominees on their boards have to go through the rigours of selection as their counterparts at private sector banks.

The extension of the RBI's guidelines on the appointment of directors in private sector banks to public sector banks would require politicians seeking appointment on the boards of government-owned banks to pass the "fit and proper" criteria of the central bank.

The government normally nominates political activists affiliated to the ruling party as independent directors on boards of public sector banks, which deprives these banks of knowledge and experience that experts as independent directors could provide.

Opposition to politicians being nominated as independent directors on government-owned bank boards has gained momentum after the recent episode at Punjab & Sind Bank, where the board was vertically split with the management and independent directors at loggerheads.

The management of the bank, including chairman R P Singh and five independent members on the board, accused each other of wrong-doing.

A delegation of bankers consisting of M B N Rao, chairman and managing director of Canara Bank and also the chairman of Indian Banks' Association (IBA), A K Khandelwal, CMD of Bank of Baroda, T S Narayanasami, CMD of Bank of India, K V Kamath, managing director and CEO of ICICI Bank, Sanjay Nayar, chief executive officer, Citigroup, India and H N Sinor, CEO of IBA raised this demand during a meeting with the RBI deputy governor, Rakesh Mohan. The meeting was part of the consultation process ahead of the first quarter review of the monetary policy on July 31.