Government nominees on the boards of public sector banks, financial institutions and insurance companies might now dominate the agenda at their meets. Concerned that the boards give a slip to the government’s areas of interests, the finance ministry has instructed all its nominees to prepare a list of key issues that should be discussed before moving on to the agenda set by the company.
The government, being the majority shareholder in all these bodies, wants these to actively consider its suggestions at the meetings. The step had been taken to ensure the areas of priority or concern for the government were addressed and the board meetings of these institutions were not spent discussing trivial things, said a finance ministry official.
A list of items to be discussed at the board meetings of all public sector banks is being prepared. This may include financial inclusion, rationalisation of branches and priority sector lending. Similarly, state-controlled insurance companies may also be asked to discuss issues such as concentration of branches in metros, motor insurance or declining premiums in their board meetings.
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* List of items to be discussed at board meetings of all public sector banks is being prepared
* State-controlled insurance companies may also be asked to discuss issues such as concentration of branches in metros, motor insurance or declining premiums in their board meetings
* All government nominees will get a copy of this list for taking up in board meeting of their respective institutions
All government nominees will get a copy of this list for taking up in the upcoming board meeting of their respective institutions. In the subsequent meetings the progress on these agenda items will be checked. This will help the government get a more active role in the affairs of its financial institutions by regularly monitoring the steps taken by them banks on crucial matters.
“What is happening now is that a lot of the time of the board goes into discussing less relevant issues, whereas some key issues are never proposed in the agenda. We are saying your agenda will be discussed, but let’s discuss some key issues first,” said the official.
In recent times, the finance ministry has issued a set of advisories to public sector banks and insurance companies, highlighting the areas of concerns and suggested action.
For instance, it has issued communications to banks with regard to review of interest rates in the light of a policy rate cut by the Reserve Bank of India, lending to large projects in consortium and closing loss-making branches. Instructions were also given to public sector general insurance companies to restructure their premiums and discontinue unhealthy discounts to get business of another state-run insurer. They were advised to take all these suggestions before their board.
Banks and insurance companies have agreed to toe the line, but some of them expressed displeasure, though in a clandestine manner, over the finance ministry’s increased “interference” in their affairs.