Letters: Banking on boards

This refers to the report on the Banking Law (Amendment) Bill to increase the cap on shareholders’ voting rights from one per cent to 10 per cent in public sector banks and from 10 per cent to 26 per cent in private sector banks (“Investors may sway state-run banks’ boardroom dynamics,” April 29). The government should have instead uniformed the voting rights cap across public and private sector banks. Moreover, a single board seat to the stakeholder would make no difference to the outcome of board decisions, though one can now expect more enlightened proceedings in the boardroom. It has also been stated, inter alia, that important decisions like farm loan waivers should be strongly debated. The truth is that the government has always ignored bank boards while taking such decisions. Even the Reserve Bank of India (RBI) was not consulted before the last farm loan waiver that amounted to more than Rs 67 lakh crore was announced.

It is quite surprising that the official representative body of bankers, Indian Banks’ Association, has itself confirmed that “it is the government that calls the shots” and that it expects a shift in corporate governance after this development. One wonders how a single board nominee would help loosen the tight grip on the working of public sector banks. Finally, when even RBI was not able to stop the government’s diktat on increasing exposure to retail loans and reviewing lending rates, how can a few board nominees lessen the government’s interference in these issues?

K V Rao Bangalore

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