Bank Boards

This refers to the news item that the RBI plans to give more powers to their nominee directors in commercial banks. One would like to know as to what the RBI nominee directors do with the existing powers? Till sometime back, RBI did not have nominee directors in commercial bank boards as a routine. It was based on the bank's requirement. RBI either nominated their representatives or sent them as observers. Now RBI has got nominee directors in the boards of all the commercial banks including private ones.

What does it want to achieve with more powers to nominee directors? What was the role of RBI nominees in the scam-tainted banks? More and more irregularities are coming to the fore. Why was the nominee unable to stop these irregularities? Is it because of lack of power?

The solution to the problem is not merely giving more powers, but ensuring effective functioning. The RBI nominees should try to help commercial banks in administration. But most of the RBI executives have no commercial banking experience. Under such circumstances, granting more powers to the nominee directors will only result in their becoming more bureaucratic. They will add to the confusion. They can perform their role better if they stand outside the management and advise them and point out the irregularities for rectification.