New Delhi: The Government seems to be on track to increase its control over PSU bank operations. Lok Sabha approved a Bill on Wednesday for giving more flexibility to Board of Directors and improve corporate governance standards in public sector banks.
Lok Sabha has passed the Banking Companies (Acquisition and Transfer of Undertakings) and Financial Institutions Laws (Amendment) Bill, 2005, which will allow the Government to appoint more directors on PSU bank boards. Rajya Sabha will take up the Banking Regulation Amendment Bill on Thursday.
Besides making government share transferable, the Bill, which was cleared by the Union Cabinet in May this year, also envisages increasing the number of whole time directors from two at present to four. The maximum number of shareholder-elected directors will be reduced by half.
This means there could be only three shareholder-elected directors. Also, it is not mandatory for SEBI or financial institutions to appoint directors.
RBI's Director will be a 'nominee' and not a 'serving officer'. The Bill allows the Government to supercede the board of weak banks on RBI's advice.
It would also help bring public sector banks in tune with the changing global scenario and modern business practices.
(With inputs from PTI)
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