The government, the RBI and the Bank Board Bureau (BBB) are developing an objective framework for performance evaluation of public sector banks (PSBs). According to RBI governor Shaktikanta Das, the framework will redefine corporate governance in state-owned banks with a focus on transparency, accountability and efficiency.
“In order to improve the functioning of PSB boards and to foster corporate governance, it is important to enhance their quality and stability through further streamlining appointment process, succession planning and compensation,” said Das. He added that these aspects could be evaluated by bank boards and reviewed by the BBB. “We also need to create a pool of independent directors across various areas of expertise,” he said.
“The performance of MDs/CEOs of both public and private sector banks should be closely monitored by the board of directors either through a sub-committee or through an external peer group review,” said Das. He was speaking at the National Institute of Bank Management (NIBM) Pune on Saturday.
Source: Times of India
