Slot For Public Shareholder On Bank Boards On Cards

The finance ministry has initiated the process of allowing shareholder representatives from the public on the boards of public sector commercial banks. It has prepared the proposal, which is currently being vetted by the law ministry, said the chief executive of a public sector bank.

Inducting representatives from shareholder public was one of the commitments made by the PSU banks in their offer document at the time of their public offer. The representation is likely to be on the basis of the proportion of stake held by the public.

Barring the State Bank of India (SBI), five public sector banks---Oriental Bank of Commerce (OBC), Bank of India (BoI), Dena Bank, Bank of Baroda (BoB) and Corporation Bank have made public issues so far. BoB chairman K Kannan told newsmen yesterday that the finance ministry has made the move on the issue and the matter is pending with the law ministry.

 

"On each annual general meeting (AGM) my shareholders ask me what has happened to their representations on the board. I understand that the finance ministry has finally acted on this and the proposal is with the law ministry," Kannan said.

He pointed out that the representation may be on the basis of the proportion of the public's stake in the share capital of the company.

The public holds about 33 per cent of BoB's equity capital. Proportional representation would mean that there could be induction of at least four representatives from the public on the board of Bank of Baroda.

Meanwhile, the board of directors of Bank of Baroda on July 30 gave its consent to acquire London Branch of Uco Bank and also buy up the complete stake in a Hong Kong-based joint venture bank involving BoB, Indian Bank and Union Bank of India.

The latter will require an investment of at least Rs 60 crore, BoB chairman K Kannan said.

All the three banks hold a third of the total equity in the Hong Kong venture called IBU. BoB will now buy out the stake of Indian Bank and Union Bank of India because the new rules in Hong Kong allow for single ownership by foreign companies in the territory.

Kannan said the move would pave the way to enter the lucrative Chinese market at some future date.

Earlier in 1991, BoB had acquired the UK branches of the Punjab & Sind Bank.