INSUBCONTINENT EXCLUSIVE:
MUMBAI: An active board seeking a say in bank regulation has thrown up questions about conflict of interest, given the presence of
industrialists on the board of the Reserve Bank of India (RBI).
Traditionally, the RBI board had a strong presence of eminent industrialists
like Ratan Tata, N R Narayana Murthy and Azim Premji
It has also included chiefs of highly indebted groups like K P Singh of DLF and G M Rao of the GMR Group
However, there was never any conflict of interest as the minutiae of bank regulation or monetary policy never came up to the board
some directors are understood to have turned vocal on a few RBI regulations
He was reacting to reports that some directors wanted the RBI central board to play a more active role and deliberate on regulations
There is talk of the board wanting to push through five decisions, which includes issues such as regulatory forbearance and allowing weak
banks to lend, in the forthcoming RBI board meet on November 19.
Sources close to the central bank also point out that, unlike boards
constituted under The Companies Act, the RBI Act 1934 grants the governor with powers that are concurrent with the board
They refer to clause 3 of the hotly debated Section 7 of the RBI Act
While the first clause confers powers on the government to give directions to the RBI, the third part indicates that the governor shares
deputy governor nominated by him in this behalf, shall also have powers of general superintendence and direction of the affairs and the
the governor are reiterated in the Reserve Bank of India, General Regulations, 1949, which also addresses the issue of conflict of interest
between board decisions and individual interests of directors
