Singapore: India's central bank has asked the government to adopt a key panel`s suggestions on restructuring bank boards, but in a phased manner, said Deputy Governor R. Gandhi on Thursday, in a bid to make decision-making transparent and provide greater autonomy, especially for state-run lenders.
RBI Governor Raghuram Rajan had appointed an external committee to suggest ways to improve governance at banks, including state-run lenders in which the government shareholding is at least 51 percent. The country`s government-controlled banks together hold over 70 percent of market share by loans.
"Recently we appointed a committee. They have come out with certain recommendations on how (bank) boards should be structured. We have recommended government to adopt these," Gandhi said on the sidelines of an industry event in Singapore.
The panel, headed by a former private bank chief executive, has proposed that the government lower its stake to below 50 percent, and several other steps including the removal of the government`s nominee from bank boards to make them more independent.
Gandhi said the recommendations will be implemented over several phases, and that the first phase will be to "revitalise the board with proper people" starting with the selection of chief executives.
"So, it`ll be more and more board-directed, board-governed banks, rather than government-controlled."
