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Empower state-run banks' boards: Rajan

'With so many constituencies to satisfy, it is a wonder that bank management has time to devote to the management of the bank,' he says

Policy Pulse
Publish Date: Aug 16 2016 9:12PM | Updated Date: Aug 16 2016 9:19PM

Empower state-run banks' boards: Rajan

Reserve Bank of India (RBI) Governor Raghuram Rajan has suggested empowering of boards of state-run banks while making the case for reduction in government and regulatory oversight, including by the central bank itself.


"Today, a variety of authorities -- parliament, the Department of Financial Services, the Bank Board Bureau, the board of the bank, the vigilance authorities, and of course various regulators and supervisors, including the RBI –observe the performance of the public sector banks," Rajan said in his address at the FICCI-IBA Annual Global Banking Conference in Mumbai on Tuesday.


With so many constituencies to satisfy, it is a surprise that bank management get time to work for  the bank, he said.


Suggesting withdrawal of RBI nominees from the boards of public sector banks, Rajan pointed out to the need to ease overlaps between the jurisdictions of the authorities, while stating "clear triggers or situations" where one authority's oversight is invoked.


Rajan said agencies like the Comptroller and Auditor General (CAG) and Central Vigilance Commission (CVC) should only get involved in situations where there is proof of malfeasance, and not when genuine business judgment has gone in the wrong.