Govt should trim its stake in PSBs to below 50%: RBI panel

May 14 2014, 01:02 IST
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RBI panel: Centre should distance itself from the governance of banks and the Bank Nationalization Acts of 1970 and 1980. Reuters RBI panel: Centre should distance itself from the governance of banks and the Bank Nationalization Acts of 1970 and 1980. Reuters
SummaryRBI panel: Centre should distance itself from the governance of banks and the Bank Nationalization Acts of 1970 and 1980.

vigilant about the quality of the loans. ďIn private sector banks senior management is incentivised on the basis of bank profitability, and the compensation is paid out through stock options. There is potential incentive to evergreen assets in order that provisions do not make a dent in profitability.Ē

The report recommended that in the case of evergreening, penalties be levied through cancellations of unvested stock options and claw-back of monetary bonuses on officers concerned and on whole-time directors, and that the chairman of the audit committee be asked to step down from the board.

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