You might expect renowned financial or business experts to sit on the boards of banks, but that isn't always true in the case of state-run banks. Petrol pump owners, a Doordarshan anchor, the head of a women's club, trustees of religious boards and a clutch of small-time politicians are some of the independent directors on boards of public sector banks.

 

The presence of this motley bunch seems to have driven the government to initiate a clean-up. "We have moved a proposal to improve the quality of independent directors. We are addressing the issue. The finance minister (Arun Jaitley) has approved in-principle the move to improve the quality. We are addressing the issue and the guidelines are expected within a month," financial services secretaryG S Sandhu told TOI.

 

Such a step is long overdue. Over the past few years, every bank board has seen a series of appointments of individuals who seem to have little to do with the sector. Look at any bank board, and you are likely to find a Congress party nominee as a director.

The Allahabad Bank website lists Ajay Shukla, who has experience in agriculture and runs a packaging business, as a member of the UP Pradesh Congress Committee. Anusuiya Sharma, his colleague from the state, is on the Union Bank board, while Chattisgarh PCC's Paras Chopda is a director in Oriental Bank of Commerce.

Life Insurance Corporation has Amardeep Singh Cheema, a Punjab Congressman. But it isn't just the Congress. Bhupinder Singh Suri, a former hockey player and owner of a petrol pump on Delhi's Race Course Road, was director on the board of Syndicate Bank for nearly nine years. By his own account, he landed the job on then prime minister Atal Bihari Vajpayee's recommendation. His daughter, Jasleenn, now sits on the bank board as a shareholder director after contesting an election. Industry veterans point out that there are brothers who have served on different bank boards.

Anita Karnavar is a part time independent director at Punjab and Sind Bank. She is an entrepreneur, a news reader in Doordarshan and also runs an NGO. NVR Reddy is another example of a part time director. He is on the board of Andhra Bank and is a graduate in agriculture. He has worked as a consultant and dabbles in politics as well.

Reddy said he was appointed to the post because he is from the vital farm sector. He said he gets paid Rs 10,000 for attending board meetings and airfare if the venue is away from his city.

Some directors have political links but also come with professional training.

For instance, Chartered Accountant Sanjay Maken, whose brother Ajay Maken was a UPA minister, sits on the Indian Bank board. Investment banker Piyush Goyal, now coal and power minister in the Narendra Modi cabinet, has served as director on the board of State Bank of India and Bank of Baroda. While the Companies Act has mandated independent directors for all companies only recently, the government has followed the practice of nominating non-official directors for years, with a majority of them being Chartered Accountants.

But over the years, good talent has eluded state-run bank boards. Independent directors are expected to bring in expertise from their respective fields and provide an oversight on the management. (Times of India)