Banks told to correct excess dominance on boards

Mumbai: Reserve Bank Governor Shaktikanta Das on Monday said the central bank has noticed excessive dominance by one or two board members even in big commercial banks and asked lenders to correct this.

Board discussions have to be free, fair and democratic, Das said, addressing directors of Urban Cooperative Banks (UCBs) at a meeting organised by the Reserve Bank of India (RBI) here. “There should not be an over-dominance or excessive dominance by one or two members of the board, or the chairman or the vice-chairman. We have seen this even in big commercial banks, wherever we have seen this, we have told the bank that this is not the way,” he said.

He said all directors need to be given a chance to speak and a particular director’s say should not be the final one on a matter.

The Governor, who made the point, while illustrating the importance of a well-functioning board, however, did not elaborate further. In the past, the Indian banking system has witnessed problems at the promoter-led YES Bank, which had to be bailed out in an SBI-led initiative, which was supported by the RBI and the government.