Institutionalisation of PJ Nayak panel report to improve governance of PSBs: Chief economic adviser KV Subramanian

New Delhi: Chief Economic Adviser K V Subramanian on Friday made a case for implementing some of the recommendations of the P J Nayak Committee report with a view to improve corporate governance in the banking sector.

Asserting that the governance aspect of the banking sector needs to be fixed, he said some of the recommendations of the Nayak committee have been implemented and some more need to be institutionalised.

A file photo of KV Subramanian. Image courtesy: Cafral.org

"For example, this government has shown the political will to let the public sector banks (PSBs) function independently without interfering in commercial aspects which is certainly important," he said at an event here.

"Some of them (recommendations) are yet to be institutionalised and that's where some of the recommendations of the Nayak committee report need consideration to make sure this process of ensuring that banks are allowed to run commercially without any previous phenomenon of phone banking, etc. The risks are there if you don't institutionalise those," he said.

Asked about by when it could be implemented, he said it would be too premature to comment on this.

Some of the recommendations of the Nayak committee implemented included splitting of the post of chairman and managing director in the PSBs and professionalisation of boards of the state-owned banks.

Besides, the government set up the Banks Board Bureau, an independent body to select executive directors of the PSBs.