The Reserve Bank of India has proposed changes that seek to strengthen the governance in India’s private sector banks. The regulator wants the tenure of whole-time directors and chief executives of a bank to have a ceiling. For an executive who is also the promoter of the bank, the tenure limit would be 10 years. For a non-promoter director and executive, the ceiling is 15 years. The regulator has also sought to strengthen the boards of banks by making them responsible of big decisions. The discussion paper comes after allegations on the CEO of a top private sector bank, ICICI Bank, and a near collapse of Yes Bank because of misdemeanors of its promoter and MD Rana Kapoor. The intention clearly is to safeguard the bank’s stability from wrong decisions of promoters and even professional executives. A long stint at a bank makes it easy for the MD and CEO to have disproportionate influence over decision making and at times over the board as well. The RBI has also sought to strengthen bank boards so that they can check against promoter influence. While it is just a discussion paper, the intention of the regulator is very clear. Experts believe that the RBI would soon bring out guidelines that will cap the tenure of private-sector bankers. Promoters such as Uday Kotak and even professional executives such as Aditya Puri of HDFC Bank will have to step down and give the reins to another banker. It is evident that banks will have to take their succession planning very seriously.
The Midcap index was up last month outpacing the frontline Nifty 50. Some limited churn also seems to be happening from large-caps to midcaps. While, midcaps earnings tend to expan ... Read more
The Midcap index was up last month outpacing the frontline Nifty 50. Some limited churn also seems to be happening from large-caps to midcaps. While, midcaps earnings tend to expand when GDP growth is strong, the weak economic growth will weigh on the midcap stocks. So what’s next for midcaps? Listen to this podcast to find out. Read more
Reliance Industries has said it will infuse Rs1.08 trillion into its telecom subsidiary, which the latter will use to reduce debt. As a result, Reliance Jio's debt to equity ratio ... Read more
Reliance Industries has said it will infuse Rs1.08 trillion into its telecom subsidiary, which the latter will use to reduce debt. As a result, Reliance Jio's debt to equity ratio will fall from about 2.5 times to 0.3 times. In contrast, other telcos have been burdened further after a Supreme Court ruling, which has asked them to pay license fee dues and penalties. Traders fear Vodafone Idea may end up in bankruptcy, since the penalty amount is higher than the cash on its books. While Jio's debt will come down, it remains a capital heavy business; and its profit needs to rise multi-fold for the company to earn a decent return on capital. Read more
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