Reserve Financial institution Governor Shaktikanta Das on Monday stated the central financial institution had observed “extreme dominance” by one or two board members even in “main industrial banks” and requested lenders to desist from such practices.
Addressing administrators of city cooperative banks (UCBs) at a gathering organized by the Reserve Financial institution of India (RBI) right here, Das stated board discussions ought to be free, honest and democratic.
“There shouldn’t be extreme or extreme dominance by one or two members of the board, or the chairman or his deputy. We’ve seen this even within the massive industrial banks… Wherever now we have seen this, now we have instructed the world and the financial institution has stated that this isn’t it.” The Street.
He stated that every one administrators ought to be given a chance to talk and the phrase of a selected director shouldn’t be the ultimate phrase on the matter.
However the governor, who made that time whereas explaining the significance of a well-functioning board, didn’t present additional particulars.
Up to now, the Indian banking system noticed issues with the promoter-led YES Financial institution, which needed to be bailed out in a SBI-led initiative, which was supported by the RBI and the federal government.
YES Financial institution co-founder Rana Kapoor, who was additionally the CEO and MD, was arrested in reference to irregularities on the financial institution.
Earlier this month, Uday Kotak, CEO and Managing Director of Kotak Mahindra Financial institution, resigned from his place and can proceed as a non-executive member of the board.
Administrators in UCBs – who’re elected to the place – must have expertise in numerous features of banking, corresponding to threat administration, IT, and many others., Das stated.
He urged managers to overview the agenda notes ready prematurely and ask related questions.
Whereas a MD ought to have the liberty to behave in accordance with what she or he feels is true, it is usually vital for administrators to make clear their doubts, Das added.