The Finance Ministry has come up with a code for non-official directors as part of a new set of measures introduced to enhance governance in public sector banks (PSBs) through improved effectiveness of non-official directors (NODs).
Peer review of NODs has also been stipulated upon completion of one year from the date of his/her nomination. The concerned PSB will now have to file reports with the Finance Ministry on the performance evaluation of NODs by the board of directors. NODs are directors nominated by the government, as promoter, at PSBs.
To enhance the effectiveness of NODs, the Finance Ministry has tasked PSBs to familiarise NODs through various programmes on topics such as cyber security, use of technology in banking, macroeconomic and fiscal policy, credit appraisal, risk management, and treasury operations.
In India, the banking system is dominated by PSBs, which account for more than 70 per cent of the assets of the system. The Acts (laws) governing public sector banks do not define independent directors. PSBs are not subjected to the corporate governance norms as stipulated under SEBI’s Listing Obligation and Disclosure Requirements (LODR) Regulations and…
