Apropos Pratip Kar's article "Empowering public sector bank boards" (June 20), banking is essentially an intermediary function wherein owners have equity and executives manage them according to the mandate of the board. But the bulk of the working funds are provided by their depositors who keep funds with the banks for safety and returns on their deposits. The bank boards have representation from the owners, government, regulators, accounting entities and government nominees who normally represent the industry.
However, no nominee of the depositors, who provide core funds for the banking system, is appointed to the boards. Perhaps this is why bad debts are increasing since every stakeholder, except the depositor, has a say in the formulation of bank policies. The Banking Regulations Act should provide for nominations from this vital segment also, to safeguard the intermediary function of the system.
P Esakki Muthu Chennai
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