The reservation issue has resurfaced and this time it is the public sector banks that are the target. The finance ministry is under pressure to define quota for candidates belong to scheduled castes and tribes on public sector bank boards.
In fact, if a section of parliamentarians get their way, there could be reservation even at director-level. At present, there is no reservation on the PSU bank boards. Reservation is restricted to the entry-level, sources said. Government officials, however, said bringing PSU bank directors under the quota system might not be easy and could be implemented only through a statute.
A PSB depending on its size can determine the number of directors on its boards. But there can be a maximum of 16 directors, of which the maximum are nomined by the shareholders.
Besides, there are former Reserve Bank of India officials on several PSB boards. ?Though parliamentary committees have raised the issue of introducing quota for SC/ST candidates at the directors? level, it would be inappropriate and may even cause imbalance in the functioning,? a senior government official said, adding appointments on the board-level should be considered only on the basis of merit and track record.
In fact, the government is mulling a proposal to make the entire selection process of independent directors even more stringent in a bid to make the overall functioning of bank boards more effective.
Though no concrete decision on the issue has been taken yet, official sources said that the entire sifting process would be redefined , in order to o make it more effective.
A number of bank chairmen feel that independent directors have often failed to play a constructive role in the overall functioning of the banks. At this juncture, directors if brought in on a quota basis would lead to further confusion and this may only spell disaster with competition in the banking industry becoming fierce.