Lok Sabha Question No. 5649 (UNSTARRED), answered on 2017-04-07
Subject: Non-Official Directors in Banks
Ministry: FINANCE
Asked by: SRIRAM MALYADRI

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

********

## LOK SABHA

## UNSTARRED QUESTION NO.5649

## TO BE ANSWERED ON APRIL 07, 2017/CHAITRA 17, 1939 (SAKA)

## NON-OFFICIAL DIRECTORS IN BANKS

## 5649.  SHRI MALYADRI SRIRAM:

Will the Minister of FINANCE be pleased to state:

- (a) the details of norms and procedure for appointment of Non-Official Directors (NODs) on the Boards of Public Sector Banks (PSBs) along with the eligibility criteria fixed for appointment of said posts;
- (b) whether the Government has appointed the NODs in all the PSBs; and
- (c) if so, the details thereof, bank-wise and if not, the reasons therefor?

## ANSWER

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

(a): The details of norms and procedure for appointment of Non-Official Directors (NODs)  on  the  Boards  of  Public  Sector  Banks  (PSBs)/Reserve  Bank  of  India (RBI)/Financial  Institutions  (FIs)/Public  Sector  Insurance  Companies  (PSICs)  are  as follows:

- I. Criteria of experience

The following categories of persons will be considered for appointment of PartTime 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  exCMDs/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 Professors having more than 20 years experience.
4. and
- 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)  and  (c):    Based  on  the  guidelines,  Government  has  appointed  28  NODs  on  the Boards of PSBs.  The Bank-wise details are annexed.

******

## ANNEX

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

| S. No.   | Name of the Bank          |   Number of Non- official Directors | Number of Non- official Directors 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.      | State Bank of India       |                                   2 | Not applicable                                        |
| Total    | Total                     |                                  18 | 10                                                    |

*****