Following members participated in the e-panel knowledge sharing discussions-
- Mr Sugata Dutta, Former Chief General Manager, Bank of India
- Dr R Bhaskaran, Former Chief Executive Officer, Indian Institute of Banking Finance
- Mr Manian KVS, President- Corporate & Investment Bank at Kotak Mahindra Bank
- Mr Hemant Kaul, Former Executive Director, Axis Bank
- Mr Aneish Kumar, Managing Director & Country Executive, Bank of NewYork Mellon
- Mr Madhav Nair, Country Head – India Mashreqbank
- Mr Manish Khera, Former MD & CEO –Fino, Airtel Payment Bank
- Ms Praveena Rai, Former Regional Head of Payments, Asia Pacific HSBC
- Mr Neeraj Chandra, Head of Operations & Technology, Abu Dhabi Commercial Bank
- Mr P B Prakash, Head-Financial Institutions Group, Indusind Bank
- Mr Prasanna Divekar, Former Head NRI Business, Overseas Offices, HDFC Bank
- Mr Sandeep Todi, Co-founder & CMO, Remitr
- Mr Rajiv Rai, Chief Digital Officer at Edelweiss
- Mr K Aayush Mazumdar, CMO, MeraEvents
- Many other CEO/CXO Bankers & Fintech professionals on FIAKS Forum
FIAKS Community Questions
What are the pros & cons of having a Regulator (RBI) nominee on the board of PSU banks? The government is reported to be against RBI withdrawing its nominees from the boards of Public Sector Banks. In fact, P J Nayak committee that reviewed governance on the bank board had endorsed the principle that RBI as a regulator and supervisor of the banks should not be on the bank boards.
Snapshot Of FIAKS Community Discussions
Chatting on this subject, a FIAKS community expert said that the RBI directors on banks boards would mean a clear conflict of interest between a Regulator and the Regulated. In earlier days of regulated banking, it was okay as banks would require guidance in matters concerning social banking. But with banks having matured and in fact often having regulatory transgressions, RBI should step back from banks boards
The question posed to the senior bankers that all the PSU banks are government-owned. How can the owner not have its nominee? What damage is done so far by the RBI nominated directors? Is it a capability issue? Is it an integrity issue? What’s the concern?
Adding to this question, an example was given of VC/PE/Angel invested firms. It was said that investor invests in the businesses and would like the business to be run properly to achieve the investment objective. Hence, they appoint their nominees on board of these companies. Why this logic can’t be applied to PSU banks where ownership is of the government?
Responding to question, a member replies that if there is a regulatory breach, then the regulator becomes a party to it. That’s where the conflict lies. The government can have other nominees on board but the Regulator cannot also be regulated by self. Agreeing to this, a senior banker adds that since the government owns the majority stake in these banks, they must also accept full responsibility for their functioning and misdeeds. They need to find capable executives who can run the banks and stop intervening in its functioning and not have RBI representatives on the board. It only means conflict. RBI directors have failed as we have seen in all these years. They have never red-flagged the unjustifiably large exposures to delinquent companies. So instead of having them, why not let them do what they are good at? Which is to inspect and oversee banks to ensure they are not flouting the rules and regulations.
If the concern of the Government is to have someone with Regulatory background as their nominee, they can always nominate senior ex-regulators. Such persons could show the regulatory viewpoints to the Board, without RBI getting trapped in the decisions as a Regulator. There is a clear need to raise the standard of bank boards to fix their lending and governance issues.
Nobody is questioning the need for Government nominees. The debate is why should the nominees be from the RBI?
Register and read the entire discussions