DR. JAYAHARI RAJ PANDEY
No doubt, multiplied BFIs within a quarter century have had positive impact on our economy in the macro scale. Competition-driven management system led by comparatively new products of highly educated and highly experienced CEOs with their firebrands, more involvement of public in the sector, and the simultaneous knowledge as well as expertise spread among the mass have been the positive factors in creating cumulative understanding and faith on the requirement of strong financial sector.
What do we look for in a board member? The simple answer is competence to tackle the policy matters; which requires fair understanding of the trade, knowledge on the related aspects, and related expertise to deal with the inter-related issues. Obviously; qualification, experience and keen interest can be taken as the prime guiding factors for better delivery from the board members. It is often seen that the promoters, being the major stake-holders, seem to be assuming the controlling position in most of the BFIs boards. There are controversies in this regard in the sense that we have mixed scenarios. On the one side, they have the prime interest to safeguard their investment so that they can be taken to act sensibly by sending the best among themselves to the board; while on the other, there are many instances in which persons with major blocks of shares seem to be assuming the board seats. Same is the case with the other side of the board members, i.e. the representatives from the public. Some even insist the current ongoing situation has provoked the double catastrophe. It is in the sense that in many cases not only the qualification but also interest by virtue of investment power is also lacking. In many cases, people without minimum assumption of shares seem to be contesting and winning the seats by virtue of proxy.
Thus, major questions borne out of the situation seem to be two. One is the non – definition of competence qualification required for the candidate; while another is the non-requirement of ownership of certain percentage of share so as to be qualified for the directorship. Many insist, both the qualifications should go together!
Now seems to be the time to pave way out of the slowly-surfacing trouble. In the corporate world, in generally agreed term, the financial discipline begins with oneself. Obviously, in such a state, the externally imposed discipline, by related authoritative body, might be the lighter. However, in our case (where we have already witnessed the absence of such discipline in few recent huge scandals) the needed discipline has broken down in some form/s. The restoration of a sound functioning in all the units, so necessary for the over-all environment, demands guidelines towards maintaining such discipline, and draconian measures against indiscipline (the actual factor responsible for incompetence, lethargy, squeamishness, indolence and complacency).
In this connection, discussion often centers with questions – also in the form of puzzlement over some enigmas- like: “ should not a group of people wanting to enter a sensitive sector like finance ( which is regarded as the backbone of the entire country- involving public money and trust) be tested thoroughly on their qualification, experience and commitment ? Should not the person sitting or vying for a position of policy and decision making go through a test on the same criteria?
The first and second questions are related with the individual competence to act on the necessary banking norms which lets them play efficiently and freely towards maximizing their benefits without jeopardizing the public interest and national interest. The inter-related issues of governance through management people, abiding by the existing rules and regulations, and never crossing the limits of their authorities become a natural part. The third question is to ensure not only the competence of the public representative but also towards making him one among the group ( to further the ultimate goal of the investment) by making him invest sufficiently to make him adequately interested in the same wave-length of the public investors.
Based on such questions being raised by many concerned/ related/ watchful people, it might be a reasonable issue to ponder upon. Relevantly, in order to promote good financial governance and to encourage to play an effective role for the capacity building of the institution within the framework of strengthening the overall financial scenario, there are practices in some countries which ask for a test on counts like experience, integrity/ honesty/reputation, solvency and financial integrity, track record, conflict of interest, holding of substantial or non-existent interest etc. It is not that we are blank in that respect as many of
the listed above and still others are the prescribed ones in our case. Due to
the functioning under the same provisions, many units own excellent personalities and have excelled. The question, however, is concerning still many others who seem to have problems in this respect.
Hence, it might be opportune time to think thus, without making judgmental error.
Dr. Pandey is Chairman of SWARCdrjrpandey@gmail.com