In a record-breaking move, the central government has nominated four of the seven new directors on the boards of seven state-owned banks.
In a July 14 notice, the Ministry of Financial Services announced the appointments of Charulata Kar to the Board of Directors of the Central Bank of India in place of PJ Thomas, K Nikhila in place of Aditya Gaiha at Indian Bank and Sonali Sengupta in place of Vivek Agrawal of the Indian Overseas Bank and Uma Sankar from Punjab National Bank in place of Anil Kumar Misra. The other three directors – Ashok Narain, Sanjeev Prakash and Prakash Baliarsingh – have been nominated to the boards of the Bank of India, Bank of Maharashtra and Union Bank of India. The outgoing directors of these three banks are Subrata Das, MK Verma and Arun Kumar Singh. These directors were appointed under the Banking Companies (Acquisition and Transfer of Undertakings) Act 1970.
The Government is responsible under section (c) of subsection (3) of Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 in conjunction with subparagraph (I) of paragraph 3 of the Nationalized Banks ( (Management and Miscellaneous Provisions) Scheme of 1970 to make the appointments on the recommendation of the Reserve Bank of India (RBI) As the Directors are largely central bank officials with expertise in banking laws and regulation, they are referred to as ‘RBI Directors’.
Incidentally, in 2019 RBI issued guidance on the “fit and proper” criteria of “elected directors” and instructed banks to form a Nominating and Remuneration Committee (NRC) composed of at least three non-executive directors on the board consists of directors. These non-executive directors, which must include an independent director and a member of the bank’s risk management committee, are tasked with conducting the due diligence process to determine the fit and proper status of those to be elected the whiteboard.
After a wave of consolidation, there are 12 public sector banks in the country, with SBI emerging as the largest bank with a balance sheet size of 59,544,183 lakh crore. The government has made a conscious effort to increase the proportion of women in management positions in banks. In 2010, a committee led by former Bank of Baroda chairman Anil Khandelwal mentioned that women made up just 17% of employees in state-owned banks at the time, and only 2.7% in managerial positions. As of March 2023, Indian Overseas Bank had the highest proportion of female employees at 36%, followed by Canara Bank (31.6%) and Punjab & Sindh Bank at 30%.
