Lok Sabha Question No. 2687 (UNSTARRED), answered on 2017-03-17
Subject: Non-executive Directors in PSBs
Ministry: FINANCE
Asked by: MANSUKHBHAI DHANJIBHAI VASAVA, RAMDAS CHANDRABHANJI TADAS

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF FINANCIAL SERVICES

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## LOK SABHA UNSTARRED QUESTION NO.†2687

TO BE ANSWERED ON MARCH 17, 2017/PHALGUNA 26, 1938 (SAKA)

## NON-EXECUTIVE DIRECTORS IN PSBs

†2687. SHRI MANSUKHBHAI DHANJIBHAI VASAVA:

SHRI RAMDAS C. TADAS:

Will the Minister of FINANCE be pleased to state:

- (a) the details of the rules laid down for selection of non-executive directors in Public Sector Banks (PSBs) in the country;
- (b) the number of non-executive directors functioning as on date, bank-wise;
- (c) whether  the  Government  has  fixed  any  minimum  educational  qualification  for selection of non-executive directors and if so, the details thereof;
- (d) whether these non-executive directors have been appointed just for namesake and the banks do not consider the suggestion put forth by them; and
- (e) if so, the details thereof along with the reaction of the Government in this regard?

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI SANTOSH KUMAR GANGWAR)

- (a)  and (c): The details of rules laid down for selection of non-executive directors (Nonofficial  directors  and  Non-official  directors  under  CA  category)  on the  Boards  of  Public Sector Banks (PSBs) are as follows:
- I. Criteria of experience

The following categories of persons will be considered for appointment of Part-Time Non-Official Director on the Boards of PSBs/RBI/FIs/PSICs:

- a. Persons of eminence with special academic training or practical experience in the fields  of  agriculture,  rural  economy  banking,  cooperation,  economics,  business management, human resources, finance, corporate law, Risk Management, industry and IT will  ordinarily be  considered.    20 years  of industry experience  at  a  senior position,  established  expertise  in  respective  areas  (successfully  led  a  reputed organization, brought turnaround in a failing organization) would be preferred.
- b. Retired senior Government officials with total experience of 20 years and minimum 10  years  of  experience  at  Joint Secretary  and  above level.    Retired  CMDs/EDs  of Public  Sector  Banks  after  one  year  of  retirement.    The  ex-CMDs/EDs  will  not  be considered for appointment as NOD on the Board of the PSB from which they have retired.  Serving CMDs/EDs of a PSB will not be considered for appointment as NOD on the Board of any other PSB.
- c. Academicians Directors of premier Management Banking Institutes and Professors having more than 20 years experience.
- d. Chartered Accountants with 20 years experience (excluding audit experience) would also be preferred.
- e. However, the experience criteria may be relaxed with the approval of the Finance Minister in exceptional cases based on merits of the case.
- f. Wherever possible  representation  may also  be given to  women  and  the  persons belonging to SC/ST/OBC community.
- II. Criteria of Educational Qualification

An NOD should at least be a graduate in any stream preferably with specialization in Business Management, Risk Management, Finance, Human Resources and IT.

## III. Criteria of age

The age of the Director, on the date of recommendation by Search Committee should not be more than 67 years.

## IV. Criteria of Work Experience

Professionals/academicians should ordinarily have 20 years of work experience in their particular field.

## V. Criteria of Disqualification

- (a) A  Director  already  on  a  Bank/Financial  Institution  (FIs)/RBI/Insurance  Company, under  any category,  may  not  be  considered for  nomination as  NOD in any  other Bank/FI/RBI/Insurance Company.
- (b) Persons  connected  with  hire  purchase,  financing  investment,  leasing  and  other para-banking activities, MPs, MLAs, MLCs and Stock Brokers will not be appointed as  non-official  directors  on  the  boards  of  Banks/FIs/RBI/Insurance  Companies. Investors in a hire purchase, financing investment, leasing and other para banking activities would not be disqualified for appointment as NOD, if they are not having any managerial control in such companies.
- (c) No person may be re-nominated as an NOD on the Board of a Bank/FI/RBI/Insurance Company on which he/she has served as Director in the past under any category for two terms or six years whichever is longer.
- VI. Criteria of Tenure

An NOD would not be considered for nomination as a Director on the Board of a Bank/FI/RBI/Insurance  Company  if  such  Director  has  already  been  a  NOD/Shareholder Director on the board of any other Bank/FI/RBI/Insurance company for six years, whether continuously or intermittently.

## VII. Professional Restrictions

- (i) If a Chartered Accountant firm is currently engaged in any PSB as a Statutory Central Auditor,  no  partner  of  the  same  Chartered  Accountant  firm  shall  be  eligible  for appointment as NOD in any Nationalised Bank/PSB.
- (ii) If  a  Chartered  Accountant  firm  is  currently  engaged  in  a  Nationalised  Bank  as Statutory Branch Auditor or Concurrent Auditor, no partner of the same Chartered Accountant firms should be eligible for appointment as a NOD in the same Bank.

(b): As on date, bank-wise details of non-executive directors (Non official Directors and Non official directors under CA category) functioning are annexed.

(d) and (e): Non-executive directors (Non official Directors and Non official directors under CA category)  on the Board of the Bank actively take part in the deliberations held during the Board meetings on various agenda placed to the Board.  Views and suggestions of nonexecutive  directors  are  given  due  weightage  and  decisions  are  taken  by  the  Board  of Directors and its Committees.

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## ANNEX

## Details of Non-executive Directors in Public Sector Banks

|   S. No. | Name of the Bank               |   Number of Non- official Directors functioning | Number of Non-official Directors functioning under CA category   |
|----------|--------------------------------|-------------------------------------------------|------------------------------------------------------------------|
|        1 | Allahabad Bank                 |                                               2 | 0                                                                |
|        2 | Andhra Bank                    |                                               0 | 0                                                                |
|        3 | Bank of Baroda                 |                                               1 | 1                                                                |
|        4 | Bank of India                  |                                               0 | 1                                                                |
|        5 | Bank of Maharashtra            |                                               1 | 1                                                                |
|        6 | Canara Bank                    |                                               0 | 0                                                                |
|        7 | Central Bank of India          |                                               0 | 1                                                                |
|        8 | Corporation Bank               |                                               1 | 0                                                                |
|        9 | Dena Bank                      |                                               2 | 0                                                                |
|       10 | Indian Bank                    |                                               1 | 1                                                                |
|       11 | Indian Overseas Bank           |                                               0 | 1                                                                |
|       12 | Oriental Bank of Commerce      |                                               1 | 1                                                                |
|       13 | Punjab & Sind Bank             |                                               1 | 0                                                                |
|       14 | Punjab National Bank           |                                               0 | 1                                                                |
|       15 | Syndicate Bank                 |                                               2 | 1                                                                |
|       16 | UCO Bank                       |                                               0 | 1                                                                |
|       17 | Union Bank of India            |                                               1 | 0                                                                |
|       18 | United Bank of India           |                                               0 | 0                                                                |
|       19 | Vijaya Bank                    |                                               3 | 0                                                                |
|       20 | IDBI Bank Ltd.                 |                                               0 | Not applicable                                                   |
|       21 | Bharatiya Mahila Bank          |                                               0 | Not applicable                                                   |
|       22 | State Bank of India            |                                               2 | Not applicable                                                   |
|       23 | State Bank of Patiala          |                                               1 | Not applicable                                                   |
|       24 | State Bank of Travancore       |                                               0 | Not applicable                                                   |
|       25 | State Bank of Mysore           |                                               2 | Not applicable                                                   |
|       26 | State Bank of Hyderabad        |                                               3 | Not applicable                                                   |
|       27 | State Bank of Bikaner & Jaipur |                                               0 | Not applicable                                                   |

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