Das warns of ‘excessive dominance’ by few board members in large commercial banks

Reserve Bank of India (RBI) Governor Shaktikanta Das warned that the country’s Central Bank has witnessed “excessive dominance by one or two members of the board [at board meetings]” of large commercial banks.

Speaking to board members of Urban Co-operative Banks (UCBs) in Mumbai, Mr. Das said, “We have told banks that this is not the way. One or two directors cannot dominate, excessively dominate. They should not think that whatever they say is correct and others do not get a chance to speak”.

He adviced that meetings be conducted in a free, frank and democratic atmosphere, where “board members are encouraged to ask whatever doubts and questions they have in mind.” While he did not specify any particular bank, his comments come in the backdrop of the arrest of Yes Bank Co-Founder Rana Kapoor and RBI’s discomfort with Uday Kotak continuing as CEO and MD of Kotak Mahindra Bank.

Addressing directors and senior management of UCBs, Mr. Das sought high quality compliance in running their banks. He expressed concern on the asset quality of several UCBs saying, “at the aggregate level some numbers look good, but when you look granularly the GNPA (Gross Non-Performing Assets) of several banks, the capital adequacy and net worth is not at all satisfactory”.