Govt, RBI may clip wings of state-owned bank advisors

The government and the Reserve Bank of India (RBI) seem to be taking a tough stand on the appointment of retired advisors at state-owned banks.

At least in two instances in the recent past, both intervened on the way advisors were appointed and the role defined for them. The first was in the case of the country’s largest lender, State Bank of India (SBI), when the apex bank barred advisors to attend the bank’s board meetings.

More recently, the government communicated to IDBI Bank that the proposal to appointment an advisor was not in line with the guidelines on their appointment.

The government asked IDBI Bank to ensure that the appointment of retired officials as an advisor could only be done one month after the post vacated by him was filled up. The government also said the advisors could only be appointment for six months and not a year. The government also said that an advisor was not entitled to benefits such as accommodation or leave.

In the case of SBI, the regulator mandated that appointment of all advisors should have the approval from the board of the bank.

In addition, RBI stipulated that an advisor could not report to the chairman of the bank and would not have any power to sanction loans.

According to government regulations, no bank can have more than two advisors.

The central bank also said persons who retired above the general manager’s rank should be eligible for advisors.