“Occasionally, there are concerns over the government exercising its ownership rights not through the established channel which is board mechanism, but outside board (of directors),” so said, according to reports, the Governor of the Reserve Bank of India. He seems to have added that “I don’t think it is a good example of corporate governance”. Strong words those, coming from the Governor, who is generally given to understatement and not critical of government in public. Well deserved too, looking at the large number of circulars — threatening to be an avalanche — emanating from the Department of Financial Services on issues of day-to-day management of banks. By micro-managing public sector banks (PSBs), without being fully equipped to do so, the Government officials could end up harming them, through inappropriate advices as discussed in brief in this article.........
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1 comment:
If issues were this simple, sorting out would have been easy through a high level discussion among CEOs of major PSBs, RBI and GOI. But things have gone much beyond and from the signals given out through the media North Block interferes in the affairs of institutions GOI ‘owns’ at micro and macro levels overlooking time-tested practices of consultation with regulatory bodies and arm-twisting where persuasion fails.
Recently, the Finance Ministry prescribed targets for rural and urban branches of Public sector Banks to generate 150 and 50 subscriptions respectively under NPS (Swavalamban accounts). This was followed up with further pressure through guidance from the ministry that the number of Swavalamban accounts opened should be taken into account during annual performance appraisal of bank employees who have been assigned the responsibility of marketing the scheme is reminiscent of the marketing of ‘public debt’ by revenue officials in olden days.This affects the morale of staff.
M G WARRIER
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