FM Nirmala Sitharaman pushes governance reforms in PSU banks

The Government has down the roadmap for strengthening corporate governance at public sector banks. Finance Minister Nirmala Sitharaman today announced that banks would now be allowed to recruit chief risk officers from market at market-linked compensation. The bank boards can also decide a system of individual development plans for all senior executive positions.

To empower the PSB boards further, Sitharaman announced that the board committee of PSBs can appraise the performance of general manager and above ranking officers. The risk committee also has been given more powers and the right to veto decisions of the senior management.

To strengthen the board committee system, the finance minister said that flexibility will be given to boards of large PSBs to enhance sitting fees of Non-Official Directors (NODs). These boards will also be given the mandate to reduce/rationalise board committees.