The government has rejected the P.J. Nayak committees recommendations of lowering government holding in banks below 50 per cent even as it is allowing for other suggestion on providing greater autonomy. Friends, you must be aware that a committee was set up by RBI under chairmanship of former Axis Bank chairman P J Nayak to review governance of boards of banks in India. The committees recommendations included dilution of government stake below 50 per cent. The Financial service secretary G.S. Sandhu stated that the particular part of the P J Nayak Committee has not been favourably considered because government want to keep the shareholding of the government at minimum 51 per cent, Furthermore, it has been clearly announced in budget also that the government wants to maintain public sector character of the banks, simultaneously, the government is considering issues related to greater autonomy to bank including raising tenure of chairman and managing directors (CMDs) of banks. As informed that Finance Ministry are planning to provide longer tenure to C.M.D. Then separation of chairman and managing director designated as C.E.O and M.D. Yet not decided. Besides, better quality of independent directors with domain knowledge is also one of the proposals for strengthening of board. On the capital raising issue, the Finance Ministry would come out with detailed blueprint for disinvestment of the public sector banks in a month or two. The government would disinvest 2-3 PSU Banks in the current fiscal year because Public sector banks require Rs. 2, 40,000 crore of equity capital over next 5 years to comply with Basel-III norms.
Posted on: Wed, 16 Jul 2014 17:05:02 +0000