In yet another directive to public sector banks, the finance ministry has asked the lenders to change the way they conduct their board meetings and devote one meeting every quarter to major policy and strategic issues. It has also suggested the banks should prepare a calendar of the meetings right at the beginning of the year, as against the current practice of convening at short notice.
The ministry said banks should prepare an action plan on four key areas — business strategy, core business, human resources and succession planning, risk and non-performing asset management. Progress on all these will be reviewed every quarter, and compared with the competitors.
A finance ministry official said the advisory has been issued to carry out reforms in the structure and methodology of meetings that have a huge agenda; also, it pertains to some less relevant reporting items, which take a lot of time.
“Issues relating to business strategy and operations should be discussed at the board once a quarter. What is happening now is a lot of time goes into reporting items prescribed by the Reserve Bank of India (RBI),” added the official.
It has been suggested the banks should delegate most of these reporting items to their management committee, which in turn can submit its report to the board on a quarterly basis. The central bank is also supportive of the idea.
The ministry wants the banks to deliberate on issues relating to products, technology, innovation in business, e-governance, branch operations, online banking and customer service. It said there should be Board Financial Reporting System, giving highlights of financial progress, action taken on key priorities and comparison with the competitors.
To enable “free and frank” discussions in the board, senior officers, who are not board members but are usually present in meetings, have been asked to attend meetings only in some cases.
Banks have also been asked to restrict the agenda to not more than three pages, and replace hard copies with electronic ones.