The Central Government is planning to implement some of the recommendations of the PJ Nayak committee. One among them is to allow Public Sector Banks (PSBs) to appoint Non-Official (executive) directors on their board. The purpose is to allow PSBs to have more say in the appointment of non-executive directors.
Last year, in August, Finance Ministry also emphasized the need to enhance the role of non-executive directors by allowing them to perform roles as presently undertaken by the independent Directors in the corporate sector.
Presently, PSBs do not have the freedom to appoint non-executive directors. The government searches and selects non-executive directors for PSBs without requiring any consent from the state owned banks. Hence, it is expected that this initiative from the Government will lead to a constructive change in board dynamics where the MD or the CEO can take advice from the board and benefit from them.
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