Bullion Dearer, Oils Divergent, Sugar Stays Listless

The Reserve Bank of India (RBI) has withdrawn its nominee-directors from

seven old-generation private sector banks to enhance corporate

governance.

The banks are Karnataka Bank, United Western Bank, Bank of Madura, Karur

Vysya Bank, City Union Bank, Lakshmi Vilas Bank and South Indian Bank

Ltd.

RBI deputy governor S P Talwar recently told a seminar on corporate

governance that the central bank has withdrawn its nominees from the

board of well-managed old private sector banks.

An RBI spokesperson said the bank has withdrawn its nominees from those

banks which are financially strong and have better quality of

management.

The nominees have also been withdrawn to avoid the perception that these

banks are taking decisions in favour of depositors, the spokesperson

said.

The nominee-directors have been withdrawn over the last one year.

The move is also aimed at improving the operational freedom of the banks

and allowing the boards to take decisions independently.

The RBI nominees on the private sector banks' boards are of the level of

general manager or retired officials of the central bank.

The second Narasimhan report on financial sector reforms had recommended

that the RBI withdraw its nominees from the banks' boards as it was

perceived to be in conflict with the RBI's regulatory role.

The RBI is also advising old private sector banks planning public issues

to structure their offerings in a manner that would enhance their equity

base to Rs 100 crore each. The move is aimed at bringing the old private

sector banks at par with new private sector banks.