Govt Wants Fi Nominees To Play More Pro-Active Role

The finance ministry yesterday took up the issue of revising guidelines on the role of nominee directors representing financial institutions (FIs) on the boards of private companies.

It was really a review meeting. We generally discussed the role of nominee directors based on papers submitted by the FIs. We also tried to find out how business will evolve for the institutions in the current year, finance secretary Montek Singh Ahluwalia later told Business Standard.

Ahluwalias meeting with financial institution chiefs yesterday covered other issues like the disinvestment plans of the institutions, the level of sanctions and disbursement of loans and the sectors of economy that will possibly emerge as attractive investment destinations.

 

The institutions feel that the infrastructure sector, particularly power and telecom, will draw a lot of their resources. These are also priority sectors for the government, Ahluwalia said.

The government will now examine the suggestions and let us know what to do, the chairman of an FI said.

The government conveyed it to the institutions that it wants nominee directors to play a more pro-active role on the boards of companies in order to ensure better corporate governance and curb tendencies that result in voilations of law.

The meeting also provided an opportunity to review the overall industrial climate, Ahluwalia said.

Governmment officials present at the meeting expressed concern over the slow growth in the sanctions by the FIs.

On their part, representatives of institutions said that they were not holding back the flow of credit to any bankable project that came up for loan sanctions.

But, there was not enough quality assets available for funding as compared to the availability of funds.

Ahluwalia also expressed the governments keenness on the funding of infrastructure projects, particularly in the power and telecom sectors. He, however, expressed satisfaction over the recent trend towards reduction in interest rates.