Government begins process for filling posts of independent directors in PSBs
It is mandatory for every listed public company to have at least one-third of the total number of directors as independent directors
The government has started the process to fill out around 100 vacancies of independent directors in public sector banks and financial institutions in order to comply with various regulatory norms of corporate governance.
According to a PTI report, a large number of listed public sector banks (PSBs) and some financial institutions (FIs) are short of minimum number of directors, which is in violation of Companies Act as well as listing norms of Securities and Exchange Board of India.
It is mandatory for every listed public company to have at least one-third of the total number of directors as independent directors, as per the Companies Act 2013.
Reportedly, Indian Overseas Bank, Indian Bank and UCO Bank are not compliant with independent director norms. Barring State Bank of India (SBI) and Bank of Baroda, the position of chairman in most of the state-owned banks is vacant. The posts of Workman Director and Officer Director, representing the employees and officers of the banks, respectively, have been vacant for the past 7 years, as per the PTI report.
Recently, in a letter to Finance Minister Nirmala Sitharaman, the All India Bank Employees’ Association (AIBEA) had said that 52% of the director posts in the 11 nationalised banks were vacant.
Of the 175 board-level positions, 91 are lying vacant and there is urgent need to address the issue, AIBEA general secretary C H Venkatachalam said in the letter.
The posts of Workman Director and Officer Director have remained vacant in 11 nationalised banks for the last seven years, he said, adding, the board of each bank has 7-9 board level vacancies.
This defeats the very purpose for which these posts were envisaged and created to take care of the varied interests and fields of banking operations of the banks, he added.